The moves, already adopted by Australia, will likely surface in the Queen's speech in May. How effective could the move be - and how will tobacco manufacturers respond?
Difficult to know for sure. "We are going to follow what they have done in Australia," a senior Whitehall source told the Guardian. "The evidence suggests it is going to deter young smokers. There is going to be legislation."
The Australian move is radical, forcing cigarette makers to adopt olive green packets along with graphic images - rotting teeth, smoke-damaged hearts and gangrenous toes - warning of the consequences of smoking. (Read the Australian cigarette manufacturer guidelines here).
British deaths directly attributable to smoking number more than 100,000 deaths a year, deaths that, according to the Policy Exchange think-tank, cost taxpayers £14bn. However the Tobacco Manufacturers' Association claims tax revenues from smoking are still worth a good £12bn a year - take a look at their claims here).
That means, if the TMA figures are to be believed, that the taxpayer is still down £2bn. The economics of tobacco, though, are far more complex. For example, Action on Smoking and Health (ASH) claims just the cleaning up of cigarette butts costs taxpayers' £342 million a year.
FumingSuch moves will mean the cigarette companies will increasingly focus on developing markets, like Asia and Eastern Europe. And their marketing will continue to adapt. ASH claims US tobacco company Philip Morris examined the economic impact of smoking on the Czech Republic.
The US cigarette giant concluded that cigarette smoking provided a net benefit to the economy because of "reduced health care costs" and "savings on pensions and housing costs for the elderly" - costs that would not have to be paid since smokers die earlier than non-smokers.