The Health Ministry hopes to strengthen regulation ahead of the 2020 Tokyo Olympic and Paralympic Games.
The new measures completely ban indoor smoking in schools, universities and hospitals.
Smoking at large restaurants, newly opened businesses, and company offices will be restricted to separate smoking rooms. The rooms will have to be sealed to contain the smoke.
Meanwhile, smoking in smaller restaurants will continue to be allowed. The restaurants will have to display smoking signs near the entrance. The distinctions between small and large restaurants are still under discussion.
Electronic cigarettes will also be subject to the regulations. Lawmakers are now considering penalties for violations.
The Health Ministry plans to consult the Liberal Democratic Party, which has voiced concern about the measures. The Ministry plans to submit legislation to the Diet in early March.
The Ministry initially considered exempting all restaurants under 30 square meters. But LDP lawmakers worried that the regulations were too strict, and called to increase the limit to less than 150 square meters. Discussions on defining the dimensions of restaurants are still underway.
Minister Katsunobu Kato said the current measures against secondhand smoke are insufficient, and need to be improved.
"Japan falls behind other countries in terms of secondhand smoke"
Manabu Sakuta, who heads the Japan Society for Tobacco Control, says Japan is lagging in its measures against secondhand smoke. He is against making exemptions based on size.
He says while countries have enacted similar exemptions in the past, some of them failed to create a non-smoking environment because of the vague regulations.
Sakuta also says any exemptions put people at risk of secondhand smoke exposure. He says the government should propose subsidies or preferential treatment for restaurants taking steps to be completely non-smoking.
Risks of secondhand smoke
According to a 2016 report released by the Ministry of Health, up to 15,000 people are estimated to die a year in Japan from secondhand smoke.
The report says secondhand smoke has been scientifically proven to cause lung cancer and strokes. It also says secondhand smoke exposes children to a heightened risk of developing asthma and sudden infant death syndrome.
Large restaurants are compelled to take measures to reduce secondhand smoke
A four-story Izakaya bar in Tokyo has a total of around 200 seats. It currently allows customers to smoke at all of them.
However, when the new measures are implemented, the bar must ban smoking inside completely. It is now considering building a private smoking room.
But the owner is worried the restaurant will lose customers. They would no longer be able to eat while smoking. And the restaurant would have to reduce the number of seats if it builds the smoking room.
The owner says he is worried about losing customers. He says some of them come to smoke and have a meal after work. They would now have to go to the private room instead.
A customer in his 30s says Izakaya bars are different from fast food chains. They offer a place where you can chat and drink for a long time. He says it will be tough not being able to smoke, and is worried that conversation will lose its life in the private room.
Some restaurants have already taken steps to ban smoking before the measures are implemented.
A beer hall in Tokyo banned smoking in its dining area last year. It used to have a smoking and non-smoking section, but there was no partition and smoke spread throughout.
A non-smoking customer says now the air is clean and customers can take their time.
The beer hall has installed a separate smoking room.
The manager says they decided to ban smoking in the dining area so that customers could enjoy beer and food without being bothered. He said beer halls need to adjust as society moves forward.