Tobacco companies could be forced to sell cigarettes in grey or brown plain packaging in an attempt to deter youngsters from taking up smoking.
Ministers are considering switching all brand packs to a standard colour so brightly coloured packages will not lure prospective smokers from a young age.
A spokeswoman from the Department of Health said colourful packs are widely accepted as the last form of marketing available for tobacco companies to recruit new smokers.
The current intention is to ask retailers to cover up their displays of cigarettes so that children are not attracted by the packaging, but ministers want to examine the use of plain packets as well.
Ministers want to see if changing cigarette packet appearance could deter children from taking up smoking and support people who are trying to quit, the spokeswoman said.
Plain packs would just show only basic information and health and picture warnings.
Health Secretary Andrew Lansley said: "We have to try new approaches and take decisions to benefit the population.
"That's why I want to look at the idea of plain packaging. The evidence is clear that packaging helps to recruit smokers, so it makes sense to consider having less attractive packaging.
"It's wrong that children are being attracted to smoke by glitzy designs on packets.
"We would prefer it if people did not smoke and adults will still be able to buy cigarettes, but children should be protected from the start.
"The levels of poor health and deaths from smoking are still far too high, and the cost to the NHS and the economy is vast. That money could be used to educate our children and treat cancer.
"We will shortly set out a radical new approach to public health in a White Paper. We want to go further and faster in improving the health of the nation based firmly on doing what the evidence tells us works."
Action on Smoking and Health (Ash) called for Mr Lansley to set a date for switching the packets immediately.
Chief executive Deborah Arnott said: "We're glad the Secretary of State recognises the harm done by brightly coloured tobacco packaging in helping hook children and young people on tobacco.
"If he is serious about putting tobacco in plain, standardised packs then he should set a date now for when the law will come before Parliament and when it will come into force.
"Time is slipping by and we need to protect our children now.
"The laws to put tobacco out of sight are already in place and should be implemented next year as planned. If we wait for legislation to require plain packaging it will take years and a whole new generation of young people will be lost to tobacco."
Despite opposition from the tobacco industry, Australia plans to have plain-packaged cigarettes on shop shelves by July 2012.
Earlier this year, Cancer Research UK welcomed the move calling for similar legislation to be introduced in England.
Jean King, Cancer Research UK's director of tobacco control, said: "Since the restrictions on tobacco marketing were introduced in the UK in 2002, slickly designed, multi-coloured packs have become one of the main ways that tobacco companies communicate brand imagery and promote their product.
"They use eye-catching pack designs to attract new smokers, the vast majority being children and young people.
"Plain or standardised packaging will help stop the pack from being the industry's silent salesman and recruiting another generation into using a product that kills half of all long-term users."
The Department of Health said 337,000 people stopped smoking last year with the help of free support from the NHS and the number of smokers has fallen by a quarter in the past decade.
In 2007 more than 80,000 deaths and 1.4 million hospital admissions were attributed to smoking and the habit costs the NHS £2.7 billion a year.