The Westminster government is to announce a crackdown on high-speed, high-stakes gambling machines this week, and support a cut in the maximum bet.

Such is the rising concern over the spread of fixed-odds betting terminals that the prime minister personally intervened to ensure that stakes and prizes would be considered as part of a policy review into the machines.

The terminals allow bets of up to £100 every 20 seconds on casino games such as roulette, leading to the machines being dubbed the "crack cocaine of gambling". Last week, ministers agreed to lower the maximum limit and dismissed industry arguments that this would hit profits and cost jobs.

A review by the Department of Culture, Media and Sport last year found that only 2.5% of plays on fixed-odds terminals are made at the maximum £100 stake level. Ministers are considering a limit between £50 and £100 – although Lib Dems remain unhappy that this would still be much higher than the £16 every 20 seconds punters can wager in arcades, and £5 limit in casinos.

There is little doubt that any cut in stakes would hurt the industry. Since 2010, annual player losses on the terminals have grown from £1.3bn to £1.5bn, and the machines now account for half of bookmakers' gross profits. William Hill, Britain's biggest bookmaker, has blamed a surprise government tax rise on fixed-odds terminals for 109 shop closures.

Matt Zarb-Cousin, a spokesman for the Campaign for Fairer Gambling, said: "Fixed-odds betting terminals are highly addictive and the bookmakers are allowed four per shop. Reducing the maximum stake to something reasonable – like £2 per spin – would ensure the bookmakers don't open multiple outlets on the high street, turning public spaces into digital casinos."

Ministers promise regulatory and planning powers to curb the clustering of shops. This week the government will confirm that betting shops will get a separate planning "class" so that councils can control the number opening in their area. New regulatory powers would mean that if bookmakers' staff failed to intervene when punters lost too much money, or were not questioning why machines were played without a break, the shop could be closed down.

A government source said: "We know lots of people are worried about the numbers of betting shops that have sprung up on their high street. It is only right to give local communities the power to object to a new betting shop if they feel they already have too many on their doorstep. The balance has to be right."

There has been increasing concern about the social cost of the machines. There are about 33,000 fixed-odds terminals in Britain and many betting shops are concentrated in poorer areas. According to Estates Gazette, there has been a 70% rise in the number of shop leases taken up by bookies since the recession began.