Tobacco products are to be forced under the counter in England and Wales.
Health secretary Alan Johnson issued a written ministerial statement this morning banning the open display of cigarettes in shops.
It is the latest in a series of moves by the government to cut the number of children taking up smoking. It has previously raised the minimum purchasing age from 16 to 18.
Today's package did not ban tobacco vending machines or branding on cigarette packs, however, prompting criticism from anti-smoking campaigners.
The overwhelming majority of the 96,000 responses to the government's consultation on the issue backed the point-of-sale removal move.
"Enticing multi-coloured displays encourage young people to start smoking - we must put a stop to this," Mr Johnson said.
"Protecting children from smoking is our goal. My hope is that shops will use this opportunity to promote healthier goods to their customers."
Around 87,000 people die in England every year as a result of smoking-related deaths.
The government points to evidence from other countries showing under-the-counter sales have a positive impact on smoking numbers. In Canada removing point-of-sale displays coincided with a drop in smoking prevalence rates from 29 per cent in 2002 to 19 per cent in 2007.
Classic liberal thinktank Progressive Vision said the move represented "petulant bullying" by the health secretary.
Its director Shane Frith said: "He is going to cause inconvenience and financial harm to the retail trade in the midst of an economic recession.
"The country's 14 million adult smokers have a right to buy and consume tobacco without hectoring politicians trying to make them feel like criminals."
Cancer Research UK's chief executive, Harpal Kumar, expressed disappointment that vending machines will still be available.
"Nearly 50,000 teenage smokers get their cigarettes from vending machines so this is a missed opportunity," he said.
The absence of today's announcement from the Queen's Speech had sparked speculation ministers had decided to abandon the measure.
Now it is believed internal Cabinet divisions fuelled by business secretary Lord Mandelson's opposition caused the delay.
He is concerned the move will prove unpopular with small retailers as the British economy enters recession.