In future the creation of any sites will not be permitted unless the owners can demonstrate that they will improve environmental conditions.
The landmark decision, contained in guidance from the Scottish Executive, follows decades of official support for the industry, which has been promoted for providing jobs in the employment-starved High-lands. But the outbreak of several diseases in wild salmon, blamed on their caged counterparts, has forced ministers to issue the new restrictions.
Last week the Sea Trout Group, representing two angling associations, began legal action against ministers for allegedly failing to control the spread of sea lice from farmed fish. The group claims that wild species have been infested and decimated by the lice.
Salmon fish farming has also been blamed for the spread of the "fish flu" virus, or infectious salmon anaemia, which has recently been found in British wild salmon. It has proved impossible to control salmon anaemia - which now affects 35 farms - and the transmission of the virus (though not yet the disease) to wild stock, including Atlantic salmon and brown trout, is bad news for anglers.
Finally, salmon farming has also been implicated in an epidemic of amnesic shellfish poisoning (ASP), which broke out in the summer along the west and north coasts of Scotland. The resulting ban on scallop fishing has led the Scottish Fishermen's Federation to warn that many of its members now face bankruptcy. The outbreak of ASP is caused by a build-up of toxic algae, on which scallops feed. Human consumption of the poisoned scallops can cause vomiting, headaches, numbness of the limbs and memory loss. In Canada recently 150 people fell ill from the disease; four died.
Although no link has been proved between the disease and caged fish, many experts think that high levels of ammonia cause the toxic algae to proliferate. Scottish salmon farming produces 7,000 tons of ammonia a year, which is discharged, untreated, into the sea. Although the Government claims that the phenomenon occurs naturally, a Scottish Executive spokesman admitted: "It is true that if you look at where the fish farms are and then examine where we have had outbreaks of amnesic shellfish poisoning, there are some correlations."
The new restrictions on salmon farms also represent acceptance that there are too many problems linked to the pounds 260m industry for it to continue to expand unchecked: production has risen six-fold in the past 10 years, and the number of farms has increased from 32 in 1980 to 330 today. After a decade of discussions, the Scottish Executive has published the new rules in a document entitled: "Locational Guidelines for the Authorisation of Marine Fish Farms in Scottish Waters".
Friends of the Earth Scotland welcomed the initiative. Don Staniford, the group's fish farming research officer, said: "It is a good first step, but we want these controls rigorously enforced. We would prefer to see a complete moratorium on fish farm expansion."