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Under the proposed legislation, individuals would be fined up to 300 euros ($470) for smoking in public places.
Greece has already banned smoking in hospitals, offices and taxis and requires restaurant and bar owners to designate smoking and non-smoking areas to protect public health, but the measures have been widely ignored.
A Health Ministry official said the new law, to be brought before parliament in the coming days, was aimed at saving the lives of an estimated 600 people who die every year from passive smoking in Greece.
Under the proposed legislation, individuals would be fined up to 300 euros ($470) for smoking in public places.
"The new law will only allow adults to buy tobacco products, while smoking will not be allowed in indoor public places anymore," Health Ministry official, Alexis Zorbas said.
An estimated 38 percent of adult Greeks are regular smokers, the highest proportion in the 27-nation European Union, according to EU statistics. Sweden has the lowest ratio of smokers, at just 16 percent.
There is currently no age limit on the purchase of tobacco in Greece, according to the World Health Organisation, unlike most of its European Union partners.
Earlier this year, neighbouring Turkey passed a smoke-free law to try to bring the nation of hardened smokers into line with much of the rest of Europe.
Many members of the European Union -- such as Belgium, England, Portugal and Italy -- have banned smoking in most indoor public places, imposing fines on those who break the law.
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