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The new rules will make it illegal to sell puppies younger than eight weeks and require anyone breeding and selling three or more litters of puppies a year to apply for a formal licence.
Those needing a licence, including online sellers, will also be required to display their permit in any advertising, and to give owners information about the five welfare needs that owners must meet under the Animal Welfare Act.
The penalty for breaking the new law will be an unlimited fine and/or up to six months in prison.
The plans also cover how pet shops, boarding houses and riding stables are licensed, introducing a single 'animal activities licence' to improve the process and make enforcement easier.
Environment Secretary Andrea Leadsom said: "Everyone who owns a pet or is looking to introduce one into their life will want to know that the animal has had the very best start to life. Yet for thousands of puppies born each year to irresponsible breeders, from smaller operations to larger puppy farms, their first weeks are spent in cramped and squalid conditions without the care and attention they need. That is why we are cracking down on the worst offenders by strengthening the dog breeding licence and giving councils the power they need to take action.
With more and more pet sales now taking place on the internet, it’s right that this market is subject to the same strict licensing criteria as other breeders and pet shops so that consumers are not misled. The plans announced today will help people choosing new family pets to be confident the animals have been properly bred and cared for from birth and are ready to move safely to their new homes.
Gudrun Ravetz, President of the British Veterinary Association, said: "This is a significant step in the right direction to improve the welfare of puppies and dogs in the UK, an issue our members are extremely concerned about as increasing numbers of poorly bred puppies are brought into veterinary practices.
"Poorly bred and badly socialised puppies cause terrible health and welfare problems for dogs so it is right that Defra has made irresponsible dog breeding a priority. We particularly welcome the move to make the sale of a puppy under eight weeks illegal, the reduction in the number of litters bred requiring a formal breeder’s licence, and the moves towards a single animal activities licence. In the future we would also like to see that anyone breeding from a dog should be required to register with their local authority.
"For these new measures to work in practice local authorities must have the necessary resources and support to fully enforce the legislation, supported by local veterinary expertise.
"We hope the new legislation will encourage owners to stop and think about where they’re getting their puppies from to tackle irresponsible breeding both at home and abroad. Prospective owners should do their homework and always use the puppy contract and information pack to make sure they ask breeders the right questions for a happy, healthy puppy."
The Kennel Club and Dogs Trust have welcomed the announcement.
Dogs Trust Veterinary Director, Paula Boyden said: "As the UK’s largest dog welfare charity, Dogs Trust welcomes the Government’s review of animal establishments licensing in England and the range of measures it sets out.
"We are particularly pleased that it will be illegal to sell a puppy below the age of 8 weeks and that there will be tighter licensing rules which will require sellers of pets to display their licence when advertising. We also applaud the move towards a risk based single licensing system which will incorporate those breeders that have gained UKAS approval rather than exempting them.
We believe that Local Authority Inspectors need support to enforce these tighter licensing rules. As such, moves to mandate the use of Model Conditions and for inspectors to be offered training and standards to be set is most welcome."
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