The Government wants an "open door" to deep sea miners looking for valuable minerals used in modern electronics.
Foreign Office spokesman Lord Wallace of Saltaire said amendments to existing deep sea mining laws would show the UK is willing to do business internationally and would prevent it from losing out to other states which welcome firms.
The Government’s Deep Sea Mining Bill seeks to bring forward greater regulations to the emerging industry, with an emphasis placed on protecting the marine environment, and was given an unopposed second reading in the House of Lords today.
The proposals, which attracted cross-party support, aim to ensure the UK can control licence applications while also widening the scope of minerals for which licences can be granted.
Lord Wallace told the Lords: "The Government would like to have an open door to any contractor who wishes to explore for any of the mineral resources of the deep sea bed. But under the 1981 Act as it stands we could not give a licence to a commercial company that wishes to explore for cobalt-rich crusts or polymetallic sulphides.
"So if a company came along with a request that the UK should sponsor an application for either of these mineral resources, we would be obliged to say no.
"The company would then no doubt simply go to one of the other 160 states which are members of the ISA (International Seabed Authority) and would seek sponsorship from one of them. So to put it crudely, the UK would simply lose out. And it's for this reason amongst others that the Government fully supports this Bill, and is indeed enthusiastic about it.
"It demonstrates that the UK is open for business internationally and we are keen to participate in what will, I'm sure in time, although perhaps not in my time, be a ground-breaking and innovative industry."
Conservative peer Baroness Wilcox sponsored the Private Member's Bill in the Lords, telling peers the changes would boost the UK's economy.
She said: "You'll be aware that the price of metals has rocketed over the last decade or so. Alas, the consequences have been felt by some of us with rail services having been disrupted when power cables and occasionally the rails themselves have disappeared.
"Metal prices are no doubt why commercial companies are now looking hard at the possibility of deep sea mining for new sources of supply (which) would be hugely beneficial. For some metals, particularly rare earths required for a lot of modern technology applications, there is a near-monopolistic source of supply.
"In these cases, there are additional important strategic benefits in the diversification of supply.
"Another area of potential benefits is in job creation. Deep sea mining should play to some of the UK's industrial and technological strengths that have developed over the decades of oil and gas mining in the North Sea, some of which has occurred at great depths."
She noted the Government and the Opposition accepted deep sea mining would take place in the future.
Baroness Wilcox went on: "If we accept that deep sea mining will happen and we want it to do so adhering to the highest possible environmental standards, the United Kingdom will be best placed to help that happen if it's at the forefront of the industry.
"The Government can do this domestically by first carrying out due diligence on the companies applying for a UK licence to ensure that they are able to carry out their proposed work, and two, ensuring the applications it considers for a licence employ the best possible standards, and three, maintaining oversight into the activities and reports of the company during the lifetime of its licence.
"Now I know that I'm reassured by the idea of a company being given a licence by the United Kingdom Government, rather than a company being given a licence by many other governments, whom I might not name and whom might not be, maybe, as thorough as we would be."