China will not allow any more internet cafes to open this year, according to a government order obtained by the state news agency Xinhua.
The number of internet users grew by 30% last year
The notice, issued by 14 government authorities, also vows to crack down on gambling through online games.
Xinhua said the new restrictions were part of a campaign to combat the rising problem of internet addiction.
Internet cafes that have already been given approval must be completed by the end of June, the news agency reports.
There are currently about 113,000 internet cafes and bars in China, according to the country's Ministry of Information Industry.
China has already banned minors from such cafes, and levies heavy fines on operators who flout these regulations.
The number of people using the internet in China has grown by 30% over the last year, to 132 million, the state Internet Network Information Centre announced in December.
That figure puts China on track to surpass the US online population in the next two years.
In January, President Hu Jintao ordered Chinese internet regulators to promote a "healthy online culture" to protect the government's stability.
The government encourages internet use for education or business purposes, but has been criticised for censoring items it deems subversive or offensive.
The Chinese government has denied such reports, and insists its regulation of the internet is in line with the rest of the world.