The job of Welsh language commissioner is to be scrapped as ministers try to hit an ambitious target of one million Welsh speakers by 2050.
Ministers are to takeover decisions on what language rules, or "standards", apply to which organisations.
Welsh language minister Alun Davies said he wanted to make the system as efficient as possible.
Commissioner Meri Huws called for evidence that changing the current system would lead to improvement.
Campaigners at Cymdeithas yr Iaith Gymraeg, who held a protest at the launch of the proposals at the National Eisteddfod on Wednesday, are concerned it will lead to a weakening of Welsh-speakers' rights.
Instead of a single figurehead, the Welsh Government wants to create a Welsh Language Commission to promote the language.
Like the current commissioner, the body would also be responsible for policing the system.
The changes are the Welsh Government's preferred options in proposals for new legislation outlined in a White Paper launched at the National Eisteddfod on Wednesday.
Any shake-up would need to be approved by AMs before becoming law.
Banks, supermarkets and other organisations in the private sector would not immediately face new rules, despite such suggestions earlier this year.
"We are not proposing that the Welsh Government will imminently be imposing Standards on bodies which do not currently come within the Standards system," the white paper said.
"Given the current economic uncertainty following the decision to leave the EU, further pressures on private sector companies and inward investment would certainly carry a risk."
Cymdeithas yr Iaith Gymraeg responded by claiming the proposals were aimed at "just making civil servants' jobs easier".
Chairwoman Heledd Gwyndaf told the BBC's Good Morning Wales programme she feared a new body would not have the same clout as a commissioner, and that being both promoter and regulator would result in a "clash of interests".
"It seems that our Welsh Labour Government are looking after big corporations and big companies... at the expense of the Welsh people," she said.
Plaid Cymru chairman Alun Ffred Jones, a former minister with responsibility for the Welsh language, said it was simply "rearranging the deckchairs".
"The government has failed miserably to promote the language," he added.
Mr Jones called for better co-ordination in Welsh Government departments covering areas such as schools, education and planning to increase the use of Welsh.
The changes to the commissioner's role are likely to be amongst the most controversial.
The current commissioner, Meri Huws, has been in post since the job was created in 2012.
Earlier this week she launched an investigation into claims retailer Sports Direct had instructed staff to converse in English only.
Asked about the proposals, she said: "I think it's a case of my job expanding. I think it's a case of my job moving forward.
"I think there is a need to look at the role of regulator and promoter - regulator and advocate side by side.
"Can they coexist in one structure? I believe they can. And if that means then that the Welsh Language Commissioner becomes a commission with that all-encompassing role, I would welcome it."
Ms Huws added: "I think change is acceptable if it is change that which leads to improvement.
"We need the evidence that any structural change will lead to that improvement, will lead to that strengthening of the Welsh language.
"Change for change's sake is not acceptable. And I don't think we should do that, because I think we will lose momentum.
"We cannot afford to lose momentum in terms of the Welsh language and of the government targets."
Mr Davies said a consultation earlier this year indicated there was too much "bureaucracy" involved in the "standards" system, which sees individual organisations given bespoke official requirements to provide certain services in Welsh.
"We want to refocus our efforts on promotion and make changes to the way the Welsh Language Standards system works - to make sure it is as efficient and effective as possible in giving people rights to use Welsh," he said.
"I believe the Welsh Language Commission will be a powerhouse for achieving both these aims."
He later told BBC Wales he was "not here to please" Cymdeithas yr Iaith Gymraeg.
Mr Davies launched the Welsh Government's strategy to meet the target of one million Welsh speakers alongside First Minister Carwyn Jones and Wales football manager Chris Coleman in July.
The 2011 census had reported a drop in the number of Welsh speakers from 582,000 in 2001 to 562,000, about one in five of the population.
Analysis by Arwyn Jones, BBC Wales political correspondent
It's clear from reading today's proposals that ministers in Cardiff Bay do not think the system works at the moment.
The document talks about a system which is "too complex, time consuming and costly to implement" and "an urgent need to make changes so we avoid undermining the confidence of Welsh speakers and the goodwill of people who don't speak Welsh".
But it's also clear there isn't a silver bullet which means Welsh speakers can access services without hindrance while avoiding "a bureaucratic and costly system which threatens to choke off goodwill towards the Welsh language".
The answer, according to today's proposal from the Welsh Government, is to get rid of the arms-length Welsh Language commissioner and bring its responsibilities in-house.
The relationship between ministers and Meri Huws has, at times, been strained. Her attempts to create Wales-wide standards for public bodies in 2013 were rejected as being too complex.
While the proposals outlined today accept there aren't any easy answers, it's also clear that ministers think they have a better chance of finding the best solution.