A £963 million fund will be set up to reward, rather than offer subsidies, for the prevention and control of air pollution in the key areas, a statement released after a meeting of the State Council led by premier Ki Keqiang.
It said controlling pollutants such as particulate matter in the air should be a key task.
The statement said coal consumption should be controlled and called for more effort to promote high-quality fuel for vehicles, energy saving in construction and the use of environmentally friendly boilers.
The government is eager to bring about a visible improvement in China's bad air which has caused discontent among its citizens and tarnished the country's image abroad.
While heavily polluting industries have emissions standards, they are not necessarily enforced, and local governments often back pollution-intensive projects.