By Agence France-Presse
The plan is the latest move to tighten government oversight over the country's fast-growing and highly popular video game industry -- and a new blow to their stock market fortunes.
The new regulations were announced late Thursday after Chinese President Xi Jinping issued an "important directive" to protect children's eyesight.
The education ministry said in a statement Thursday that the authorities will regulate and control the total number of internet games, as well as the number of new titles.
The statement, which was signed by eight ministries, said the authorities will also explore an age-appropriate alert system and take actions to limit the amount of gaming hours among children.
The news sent the shares of Chinese video game companies sharply down on Friday morning.
Tencent dropped by more than five percent in Hong Kong while Perfect World Co, which was once listed on the NASDAQ stock exchange, sank almost nine percent in Shenzhen.
Smaller game developers also lost ground in Shenzhen. Youzu Interactive Co plunged nearly eight percent and Sichuan Xun You Network Technology lost more than eight percent. Ourpalm Co was down nearly six percent.
China has a high rate of myopia among students at an increasingly younger age, the official Xinhua news agency said, citing Xi's order.
Myopia has seriously affected children's physical and mental health, posing a big problem for the nation's future, the agency said.
The plan follows a halt in the approval of new online game licences.
Bloomberg News reported earlier this month that China had stopped approving any new mobile games as part of a wider shake-up of the market.
No new titles for domestic firms had been added since May and no new imported games has been approved since February, according to the National Radio and Television Administration, which updates the online list of approved games regularly.