Drone users will be required to register and sit safety-awareness tests as part of a Government clampdown on rogue operators.
Police will be given greater powers to prevent unsafe or criminal use of the machines while new technology could be used to create no-fly zones for drones.
But alongside new laws, ministers are also keen to develop technology allowing the greater use of drones for tasks including deliveries of everything from shopping to human organs.
Aviation Minister Baroness Sugg said: “Drones have great potential and we want to do everything possible to harness the benefits of this technology as it develops.
“But if we are to realise the full potential of this incredibly exciting technology, we have to take steps to stop illegal use of these devices and address safety and privacy concerns.
“These new laws strike a balance, to allow the vast majority of drone users to continue flying safely and responsibly, while also paving the way for drone technology to revolutionise businesses and public services.”
The draft Drone Bill which will be published in the spring will give police officers the right to order operators to ground drones where necessary and seize parts of the machines to prove whether it has been used to commit an offence.
Banning drones from flying near airports or above 400 feet could also form part of the new regulations.
Last month it emerged a drone nearly hit an aircraft approaching London Gatwick, with the jet’s pilot claiming it put 130 lives at risk.
The flying gadget passed directly over the right wing of the Airbus A319 which was preparing to land at the West Sussex airport in July, according to the UK Airprox Board (UKAB).
Under the new proposals drone operators will be required to use apps – so they can access the information needed to make sure any planned flight can be made safely and legally.
Changes to the Air Navigation Order will be used to introduce the safety test and the registration requirement for owners of drones weighing more than 250 grams.
The Government is also working with drone manufacturers on geofencing technology which produces virtual barriers preventing the machines from operating in restricted areas.
A new initiative being launched on Monday will see up to five cities given support to research and develop drone technologies which could be used for tasks including emergency health services and organ transport, essential infrastructure assessment and repair, and parcel deliveries and logistics.
Assistant Chief Constable Serena Kennedy, the National Police Chiefs Council’s lead officer on drones, said: “Police forces are aware of the ever-increasing use of drones by members of the public and we are working with all relevant partners to understand the threats that this new technology can pose when used irresponsibly or illegally.
“Do not take this lightly – if you use a drone to invade people’s privacy or engage in disruptive behaviour, you could face serious criminal charges.
“Police officers will use all available powers to investigate reports of criminal misuse of drones and seek the appropriate penalty.”