A government statement released Thursday outlined the steps taken to prevent housing and land price hikes.
The circular, jointly issued by the Ministry of Housing and Urban-Rural Development and Ministry of Land and Resources, said that local governments should stop land deal if current inventories will take more than 36 months to be shifted.
Local governments should disqualify any bid backed by capital from questionable sources, said the circular.
The circular demanded that local authorities make bidding flexible, and outline punishments for inadequate or fabricated work by local authorities.
It said that cities and counties that have more than one million inhabitants should make three-year (2017-2019) and a five-year (2017-2021) plans for housing land supply, and make the plans public by the end of June.
Sales of land for residential projects almost doubled in China's first-tier cities during January-March, according to China Index Academy, a property research organization.
Land sales in major cities, like Beijing, Shanghai and Guangzhou, totaled 5.08 million square meters in the first quarter, an increase of 98 percent from a year ago, the highest for the past two years.
The government is trying to cool runaway housing prices in major cities where huge demand and limited supply have pushed prices to record high.
Major Chinese cities are taking fresh measures including increased deposits for second-home buyers, adding to the slew of steps taken since October in dozens of cities to prevent home prices from rising out of control.