Sports minister Gerry Sutcliffe has welcomed the Premier League's new rules on home-grown players and club finances as being good for the long-term health of football.
The 20 clubs have agreed to name 25-man squads with at least eight players 'home-grown' - trained for three years under the age of 21 in England or Wales. Top-flight clubs will also have to pass an annual financial test to prove they can repay their debts.
Sutcliffe said: "I welcome the Premier League's introduction of a home-grown player quota for squads and its implementation of strengthened financial reporting rules."
He added: "These moves will encourage clubs to develop and bring through young talent and help ensure clubs are financially stable."
Clubs that do not pass the test may find themselves blocked by the Premier League from making new signings and have to agree a new budget.
Sutcliffe added: "I am pleased the Premier League intend to impose tough sanctions on clubs that take big financial risks that could threaten their future.
"Clubs must be sustainable for the long-term health of the game in this country."
Government ministers would like the Premier League to go even further but view Monday's announcement as a big step in the right direction.
The Premier League however have opposed UEFA president Michel Platini's plan that clubs should only be allowed to spend what they earn.
League chief executive Richard Scudamore said: "At our club meeting last week, the clubs absolutely endorsed our position of not linking expenditure to income."
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