Social media sites and search engines could soon have to stop paid-for scam adverts appearing by law.
The updated proposal is part of the Online Safety Bill, a piece of landmark legislation trying to determine how sites deal with harmful content.
Campaign groups say being a scam victim can cause both financial and emotional devastation.
The government is also launching a consultation into how online advertising is regulated.
Under a new legal duty being added to the bill, platforms will be required to put in place processes to block ads appearing online and remove them if they slip through the net.
The idea is intended to better protect people from scams where criminals impersonate celebrities or companies to steal personal data, peddle unsafe financial investments or break into bank accounts.
Culture Secretary Nadine Dorries said: "We are also announcing a review of the wider rules around online advertising to make sure industry practices are accountable, transparent and ethical – so people can trust what they see advertised and know fact from fiction."
Martin Lewis, who founded Moneysavingexpert.com, and consumer group Which? both welcomed the news – they had called for scams to be included in the bill.
Mr Lewis described an "epidemic of scam adverts", adding: "Scams don't just destroy people's finances – they hit their self-esteem, mental health and even leave some considering taking their own lives.
"The government now accepting the principle that scam adverts need to be included, and that firms who are paid to publish adverts need to be responsible for them, is a crucial first step."
"Until now, only user-generated scams were covered – which risked pushing more scam ads, incentivising criminals to shift strategy."
But the consumer champion thinks the scope of the bill could be wider.
"We need to analyse and scrutinise this update – one of my concerns is it looks like display advertising that you see on third-party websites is not within the scope of the bill when it comes to scam adverts."
Anabel Hoult, Which? chief executive, added: "This could make a huge difference to stemming the tide of fake and fraudulent ads on social media and search engines which cause devastating financial and emotional harm to innocent victims.
"The Online Safety Bill must now ensure that the regulator has the support and resources it needs to hold companies to account and take strong enforcement action where necessary, so that fraudsters are prevented from using adverts to lure unsuspecting victims."
Separately, the government is launching a consultation on proposals to tighten the rules for the online advertising industry.
Social media influencers could face stronger penalties for failing to declare properly when they are being paid to promote products online.
Hashtags including "#ad" or "#spon" are often used in posts, but studies suggest some Instagram stars do not adhere to the rules.
Harmful or misleading adverts, such as those promoting negative body images, could also be subject to tougher rules but exactly how has yet to be ironed out.
The communications regulator Ofcom will set out further details on what platforms will need to do to fulfil their new duty in codes of practice.
It could involve ID checks for those who publish ads, and ensuring that financial promotions are only made by official firms.