In order to curb the number of strays and make it easier to track stolen animals, all dogs in England must be microchipped by 6 April 2016.
The new law will mean that animal charities, vets and local authorities can track down the owner of a dog if it is thought to be a stray.
If dogs are stolen and later recovered, it will also make reuniting them with their owners much simpler.
Around 60 per cent of pet dogs in the UK are already chipped, and the cost of installing the microchip will come at the owner's expense.
So why it is necessary to legislate on the matter?
According to charity Dogs Trust, an estimated 118,932 stray dogs were handled by local councils across the UK between 1 April 2011 and 31 March 2012.
Trying to find the owner of an un-microchipped dog takes time and taxpayer money, and more than half of all strays handled last year never made it back home.
Of those dogs, nearly 7,000 had to be put down.
Apart from serving to reunite genuinely lost or stolen dogs with their loving owners, microchipping will also ensure irresponsible owners are more likely to be brought to justice.
From April 2013, anyone who breaks the rule will be given a short period in which to comply before being fined up to £500.
If registered dogs are found mistreated and abandoned, the owners can be traced and dealt with accordingly.
So the new rule will help catch criminals as well as returning lost dogs.
A spokesperson from Dogs Trust said: "We believe compulsory microchipping will help reduce the burden on animal welfare charities such as Dogs Trust and reduce the cost to local authorities of kennelling.
"This could save the public purse approximately anywhere between £20.5 and £22.8 million per year."
Is your pooch chipped?
If your dog isn't already chipped, you've got a while to get it done, but it's in your and your dog's best interest to sort it out as soon as possible.
Dogs Trust say you should ensure whoever implants the microchip is a trained professional.
Your trusted vet is the best bet, and the procedure usually costs between £20 and £30.
The chip, which is only as small as a grain of rice, is inserted under the skin between the shoulder blades and will not hurt your dog.
It's very much like a minor injection and the dog will not be able to feel the chip after it has been implanted.
Free microchipping events
For those who may find the fee too expensive, Dogs Trust is running free microchipping events around the country.
The charity's spokesperson added: "Dogs Trust is offering free microchipping at its network of 18 rehoming centres throughout March and April on a drop-in basis."
For further details, you can visit the Dogs Trust free microchipping event page or call your nearest centre to make an appointment.