The Department of Health, announcing the legislation on national No Smoking Day, said the new rules would be phased in to give retailers time to adjust.
Cigarettes and other tobacco products must be kept out of sight in large stores and supermarkets by 2012 and in small shops by 2015.
Only temporary displays in "certain limited circumstances" will be allowed as the changes take effect, the report said.
"Smoking is undeniably one of the biggest and most stubborn challenges in public health. Over eight million people in England still smoke and it causes more than 80,000 deaths each year," the report quoted Health Secretary Andrew Lansley saying in a statement.
The rules were part of a strategy to stamp out smoking by stopping the promotion of tobacco by making it less affordable and helping users to quit.
Just over 20% of adults smoke in England and the government wants to reduce that to 18.5% by 2015.
The government said it would keep an "open mind" on whether manufacturers should be forced to put cigarettes in plain packaging and is planning a consultation on different options before the end of this year.
Britain's cigarette market is dominated by Imperial Tobacco, which makes Lambert & Butler and Japan Tobacco International which makes Benson & Hedges. Together they control more than 80% of the domestic market.
Pall Mall cigarette maker British American Tobacco has a share of around 6-7%.
The tobacco companies are challenging the ban through the British courts with a judicial review due in April. – Source: Reuters