Tobacco advertising will now be limited to the size of an A5 sheet of paper and a health warning must be displayed accounting for a third of that space.
Vending machines will only be able to carry a picture of the products on sale.
Health secretary John Reid said: "These new measures will mean that people will no longer be bombarded by the large, colourful tobacco advertising at their local supermarket or corner shop."
The new restrictions will be enforced by Trading Standards officials, who can levy fines up to £5,000. Persistent offenders will also receive jail sentences of up to five months.
Jean King, director of tobacco control at Cancer Research UK, welcomed the restrictions.
"Point-of-sale has been an opportunity for tobacco companies to promote their deadly products, and we are pleased this loophole has now been closed," she said.
In November, the High Court rejected a claim from cigarette manufacturers contesting restrictions placed on point-of-sale tobacco advertising, which they called "draconian" and "against freedom of speech".
The judge presiding over the case, Mr Justice McCombe, told the court of the health and economic risks smoking causes to society, which can only be amplified by advertising.
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