The proposals would force agents to disclose how much they were charging in excess of a ticket's face value.
Customers will have the right to know where their seat is, and if the tickets are part of a travel or accommodation package, their face value must be specified.
The Society of London Theatre welcomed the move. It said it regularly received complaints from customers who had paid up to five times a ticket's face value. Susan Whiddington, the society's spokeswoman, said: 'We get four or five complaints a week and that's only the tip of the iceberg.'
Lord Strathclyde, the consumer affairs minister, said: 'People are outraged when they pay high prices for what they think are good quality tickets, only to discover their face value is much lower.'
London's theatre agents, unhappy at being associated with touts, last week pre-empted the Department of Trade and Industry move by forming a self- regulating body with near identical provisions to those proposed yesterday plus a planned code of practice. Their proposals require agents to provide receipts for tickets sold. In return, the agents will be recommended by the Society of London Theatre and the London Tourist Board and could be authorised to use an official logo.
Prices can vary widely. Most agencies charge a 25 per cent booking fee, whereas touts charge as much as they can get, and customers may pay for the best seat in the house only to find themselves sitting behind a pillar.
A committee representing the London Tourist Board (LTB), the Society of London Theatre, the All England Lawn Tennis and Croquet Club and the Royal Albert Hall is planning to allow reputable dealers to be identified with a logo to protect consumers. A spokeswoman for the LTB said nothing definite had been decided.
There was general support from London's ticket agents. Mark Hopkins, the office manager of Premier Box Office Ltd, said: 'I am in favour of anything that would stop the cowboys. Whether it will work in practice is a different matter. Licensing is the only way to stop it. Selling outside the theatres should be illegal. If you are a market trader you can't do it so why should the touts be allowed?'
John Smith, 29, a ticket tout working outside the Palace Theatre in the West End, said: 'If the police wanted to they could stop it. They could just turn up with 20 men and round us up.
He added: 'I feel we are providing a service. People are grateful we do it.'
Another tout claimed that if it were not for the big agencies buying large numbers of tickets from Stoll Moss, which owns 11 theatres in the West End, prices would be a lot cheaper.
Edwin Shaw, ticket services manager for Stoll Moss, insisted that despite their efforts to sell tickets to reputable agencies, touts still managed to get large numbers.
Eric Cottle, 60, from Durham, who was trying to buy West End theatre tickets, blamed touts' success on customers who were prepared to pay. 'I don't agree with it, but if people are stupid enough to pay, that's their look-out,' he said.
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