"We know that lots of people are worried about the numbers of betting shops that have sprung up on their high streets in recent years.
The Government is due to announce its review into gambling policy this week, but the changes are expected to be opposed by many of the gambling industries leading players.
Last week, William Hill announced it would close 109 of its 2,434 betting shops after the Government increased the tax on fixed-odds betting machines from 20 per cent to 25 per cent.
A Government source said: "We know that lots of people are worried about the numbers of betting shops that have sprung up on their high streets in recent years.
"It is only right to give local communities the power to object to a new betting shop if they feel they already have too many on their doorstep, the balance has to be right."
The Government will also require gambling operators when applying for a licence to show how they would comply with player protection measures such as messaging in windows.
In February research from Deloitte found that 52 per cent of people wanted to see fewer betting shops on their high streets.
Under the current system planning applications are not needed for new betting shops to open up.
Bookies can move into premises left empty by another business and are viewed in the same category as estate agents, banks and building societies.
William Hill is not the only betting firm looking to close shops, with Ladbrokes having already announced it is planning to shut 50 outlets this year.
Fixed-odds betting terminals have been described as the "crack cocaine" of the gambling world, and there are an estimated 33,000 such terminals in Britain.
According to Estates Gazette, there has been a 70 per cent rise in the number of shop leases taken up by bookies since the recession began.
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