Superfast fibre broadband will now reach 95% of the UK by 2017, which means around 1.4 million homes more than originally planned but two years behind schedule.
Plans for the UK to have the "best broadband in Europe" by have been scrapped after the deadline became unrealistic.
Government unit Broadband Delivery UK (BDUK) was allocated £530million to make good on its promise of delivering superfast broadband to 90% of the population by 2015.
However, the European Commission was slow to approve funding over concerns about BT's dominance of the scheme, causing several lengthy delays.
BT was left as the only contender for contracts to install the fibre optic infrastructure when Japanese technology firm Fujitsu pulled out of the bidding process in March.
The project is still going ahead, with the aim now being to reach 95% of the population - an extra 1.4 million homes - two years after the original deadline, in 2017.
Chief secretary to the Treasury, Danny Alexander, announced full details of the government's revised objectives, with an additional £250million being allocated to BDUK.
He said: "This government has already committed to a £1.2billion programme of public investment in fixed-line superfast broadband. I've seen first-hand the impact that our investment is having in smaller, rural communities.
"It's absolutely crucial, if we want to rebalance our economy, that it's not just the biggest cities that have access to the fastest broadband. The UK already has better broadband coverage, usage and choice than Germany, Italy, France and Spain - but we want to go further."
Superfast fibre optic broadband is currently available in around two-thirds of UK homes, with providers such as BT, Plusnet and Sky offering a range of high-speed packages.
It was recently reported councils across England were still waiting to receive money promised by the government to help them upgrade local broadband infrastructure.
A survey found just £3million of the earmarked £530million had been handed over.