Cash payments for scrap metal are to be outlawed and fines "significantly increased" to tackle the growing problem of metal theft.
Home Secretary Theresa May announced the proposed new laws in a written statement to MPs.
The measures will end the current "low-risk transactions" for people who steal metal - such as cables - which have disrupted rail services, she said.
Labour said the measures did not go far enough to tackle the "epidemic".
The metal recycling industry is worth £5.6bn and employs 8,000 people in the UK.
There have been growing calls for action as metal thefts from railways have increased in recent years - causing disruption to 3.8 million passengers last year and costing more than £16m.
Many churches have had lead stolen from their roofs, while copper has been taken from telephone exchanges and building sites.
In a parliamentary statement, Mrs May said a change in the law was the "only sustainable, long-term solution to the growing menace of metal theft.
"There is an urgent need to make stealing metal less attractive to criminals, and tackling the stolen metal market will act as a significant deterrent".
She announced that fines for all offences listed under the 1964 Scrap Metal Dealers Act would rise.
Cash payments for scrap metal would be banned, as they led to "anonymous, low-risk transactions" for thieves and meant "poor record keeping" within the industry, Mrs May said.
The new measures will be added as amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill.
Her announcement came on the day the Commons transport committee called for these and other measures to tackle metal theft.
The committee's chairman, Labour MP Louise Ellman, said of the scrap metal industry: "It's a Steptoe and Son situation... no questions asked."
For Labour, shadow home secretary Yvette Cooper said proposals to increase fines and stop cash payments at scrap yards were welcome.
But she said police needed greater powers to enter scrap metal yards and close dealers not obeying the rules.
"The Government needs to get serious on metal theft... wire theft is causing repeated power cuts, plunging communities regularly into darkness, and putting lives at risk.
"Yet despite this growing problem, the Home Secretary is being too slow and too sluggish."
She said Labour would be putting forward tougher and more substantial proposals in Parliament next week.