Anyone buying or adopting a pet less than six months old will have to deal directly with the breeder or a rescue centre under the proposed ban.
The move aims to reduce serious health problems and socialisation issues which afflict pets kept in poor conditions by unscrupulous, profit-driven breeders.
It comes on the back of the prominent Lucy’s Law campaign which calls for an immediate halt to the sale of young pets by third-party commercial dealers.
Environment Secretary Michael Gove paid tribute to the campaign, saying: “A ban on third-party sales will ensure the nation’s much-loved pets get the right start in life.
“People who have a complete disregard for pet welfare will no longer be able to profit from this miserable trade.”
A petition supporting Lucy’s Law has been signed by nearly 150,000 people and was debated in Parliament in May.
The consultation follows a call for evidence on the ban which ran from February to May.
Marc Abraham, of the Pup Aid campaign, said irresponsible breeders have for years used third parties to keep themselves hidden from the buying public and the proposed ban will make all breeders accountable.
Paula Boyden, veterinary director at the Dogs Trust, welcomed the move but said additional steps were needed to safeguard the health of pets.
She said: “We believe that, to be effective, a ban needs to be supported by some key additional measures, such as regulating rehoming organisations.
“These measures will close off potential loopholes and ensure a ban is the success we all want to see.”
The Kennel Club, which organises the Crufts dog show, also welcomed the potential move.
Caroline Kisko, Kennel Club secretary, said: “We are absolutely delighted that Michael Gove has announced that Defra will be issuing a consultation on an outright ban on third- party sale of puppies, which is a vital step forward to tackling the cruel puppy farming industry.
“When this policy is implemented it will stop the suffering of many dogs and send a very strong message to puppy buyers that it is never OK to see a puppy in any environment other than the one it was born and raised in, and with its mum.”
New laws come into force on October 1 banning licensed sellers from dealing in puppies and kittens less than eight weeks old.