Under the new strategy the group will attempt to double digital revenues to nearly £100 million by 2016 and save £25 million over the same period.
In a series if presentations to staff, GMG chief executive Andrew Miller said the the group was seeking a "major transformation" at the titles and warned that the company could run out of cash in three to five years if business operations did not change.
The shift in focus away from print will also see a redesign of the newspaper's weekday editions, with less news and more analysis.
According to the Guardian, research shows that half of its readers read the newspaper in the evening rather than morning. Editor-in-chief Alan Rusbridger said that the aim was now to create a title "as relevant at 9pm as 9am", designed to compete with "Newsnight, not News at Ten".
ABC figures for April saw circulation of the Guardian drop 12.5 per cent year-on-year to 262,937, and the Observer fell 13.9 per cent to 293,053.
Digital traffic is up however, with 2.4 million unique users in April, a 31 per cent increase year-on-year.
Overall turnover for GMG was £221 million in the 2009/2010 financial year, with around £40 million of that coming from digital. That figure dropped by £23 million in 2010/2011 to £198 million.
The print editions currently punch above digital in revenue terms, with digital earnings expected to total £47 million for the current financial year.
But Miller said yesterday that resources would be moved from print and reinvested in digital growth areas, and there would new investment in brand marketing.
According to GMG there are no job losses planned at this stage.
Rusbridger stressed that the Guardian was not "getting out of print", but said that it requires "a greater focus of attention, imagination and resource on the various forms that digital future is likely to take".
He also reinforced the company's commitment to "open journalism", meaning that its content will remain free to read online.
"The Guardian has consistently led the way on digital innovation and is currently showing year on year growth of 40 per cent. We are expanding into America and continuing to pioneer what we call open journalism – editorial content which is collaborative, linked into and networked with the rest of the web.
Miller said that the "opportunities presented by the growth of digital media are immense".
"The Guardian's journalism has never been more widely read. However, the same forces driving opportunity in digital are creating challenges for newspaper publishers across the developed world, including GNM.
"Circulation and advertising revenues in print continue to fall throughout the sector as readers and advertisers embrace new technologies and digital platforms, and this is not a trend that's about to go into reverse.
"We are going to become a digital-first organisation, and are at the beginning of a process of transformation to achieve that. The quality of our journalism, our long-term outlook, the assets in GMG's portfolio, our unique ownership structure, our progressive approach to digital media and our fantastic people mean we can do this from a position of strength.
"Innovation of this kind is in the best traditions of the Scott Trust and will help us to fulfil our mission of securing the independence of the Guardian in perpetuity."
The Guardian announced in June 2006 that it was to switch to a "web-first" service, meaning that its news would go up online before going in the print edition. It claimed at the time to be the first British national newspaper to do so, and said that the change in strategy marked "a significant departure from the established routine of newspaper publishing where stories are held for 'once-a-day' publishing".
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