George Osborne is planning to devolve decisions on opening times to local authorities and mayors.
The Chancellor's plans are expected to be taken forward in the Government's new Enterprise Bill in the autumn.
Existing laws prevent larger shops from trading for more than six hours on a Sunday.
The Chancellor said: "Even two decades on from the introduction of the Sunday Trading Act, it is clear that that there is still a growing appetite for shopping on a Sunday.
"There is some evidence that transactions for Sunday shopping are actually growing faster than those for Saturday.
"The rise of online shopping, which people can do round the clock, also means more retailers want to be able to compete by opening for longer at the weekend.
"But this won't be right for every area, so I want to devolve the power to make this decision to mayors and local authorities.
"This will be another part of my plan to ensure a truly national recovery, with our great towns and cities able to determine their own futures."
Following the announcement of possible changes to Sunday trading laws, John Allan, national chairman, Federation of Small Businesses said: "The FSB remains concerned about the impact of any change to Sunday trading rules on smaller retailers. As well as assessing the potential impact of these measures, the Government should be taking a wider holistic view to see what else can be done to support these businesses.
"Bringing forward reforms to business rates is an immediate priority. We should also do more on liberalising licensing laws, easing planning restrictions and on improving customers’ access to parking. All are areas which are currently doing more to hold back the high street than Sunday trading.