The State Council, or cabinet, announced the move along with a range of other policies aimed at reducing emissions of pollutants -- from forcing industries to install anti-pollution equipment to strengthening the collection of fines.
China has long been criticised for incentivising local officials to pursue economic growth while placing little emphasis on meeting environmental targets, leading to weak enforcement of environmental laws.
But the country will "build a targeted responsibility and evaluation system for cities and provinces based on air quality improvement," according to a report of a State Council meeting carried on its website on Friday.
The meeting, chaired by Premier Li Keqiang, also agreed that the government would not approve industrial projects which fail to meet emissions standards, and curb the growth of highly polluting industries such as steel and aluminium manufacturing, according to the report.
The capital Beijing earlier this year saw levels of particulate matter in the air reach almost 40 times World Health Organization limits, as other cities in China were hit by high levels of pollution, provoking outrage nationwide.