The Fostering Network, which oversees Britain's 42,000 foster carers, will issue new rules to local authorities and agencies to protect young children from cancer and asthma.
Studies have shown children are especially vulnerable to such illnesses. The move is also to counteract fears children will sue if they later get smoking-related problems.
But it has drawn criticism it will aggravate the shortage of foster parents, which currently stands at 10,000.
The new rules, being backed by the British Association for Adoption & Fostering, were unveiled in a Fostering Network policy paper called "Foster carers and smoking".
Local authorities will still have the final say over who can foster but are expected to agree to the proposals.
Pro-smoking group Forest said the latest move was blatantly discriminatory. A spokesman said: "They are risking removing thousands of excellent foster parents from the system for the simple reason that they smoke."
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