The "fit and proper person" test for landlords could also be tightened up, with more stringent criminal record checks as part of a package of measures announced by Housing and Planning Minister Gavin Barwell.
Under the plans, which will apply in England, the minimum room size in shared homes will be 6.52 square metres.
Mr Barwell said: "In order to build a country that truly works for everyone we must ensure that everyone has somewhere safe and secure to live.
"These measures will give councils the powers they need to tackle poor-quality rental homes in their area.
"By driving rogue landlords that flout the rules out of business, we are raising standards and giving tenants the protection they need."
The measures build on plans set out in a discussion paper in November 2015.
A consultation on the proposals also sets out plans to ensure mandatory licensing rules apply to all shared homes with five or more people from two or more households.
They will also include flats above and below shops and other business premises - currently licensing only kicks in for homes with three or more floors, and excludes properties attached to businesses, unless they are in a three-storey building.
Landlords will also be required to provide decent storage and disposal of rubbish.
Ministers are also considering whether the current licensing rules for purpose-built student accommodation are appropriate.