The World Bank and the International Monetary Fund are developing proposals for a "tax" on money which is poured into a country for a short period then withdrawn.
Britain and America are both backing the idea, which has implications for the emerging markets of the far east and eastern Europe where speculators have made billions from gambling on currency rates.
Clare Short, the Secretary of State for International Development, believes that more control is needed to protect poor countries which cannot afford huge swings in investment. Gordon Brown, the Chancellor, also believes reform is needed, although he is more cautious about controlling the market.
The plan - a compromise between full scale taxation and the status quo - would tackle the damaging effects of short term capital flows, which leaves countries lurching from boom to bust as millions of pounds are invested then suddenly withdrawn.
Investors would be forced to deposit extra money in a central fund as a "guarantee" of their long-term intent. They would forfeit it if they took their cash out of the country within the minimum time limit, likely to be around a year.
However, the proposal will be fiercely resisted by the business community which sees it as a return to artificial controls on the free market. It will seriously limit the opportunities for currency speculators to win huge cash windfalls. The scheme would not apply across the world, but countries whose economies were at risk would be encouraged to sign up to it in order to stabilise the situation at moments of potential crisis.
In the past, senior figures at the IMF have fiercely resisted any proposals to control the free flow of capital. However, ministers say that it has now softened its line following criticism of its handling of the current crisis.
"There has been a distinct change in the mood of the Bank and the Fund," one senior Whitehall source said.Reuse content