The government's action, which marks the biggest regulatory change in the United Kingdom gambling industry since rules were liberalised in 2005, was welcomed by charities, the church and opposition politicians.
The biggest wager for popular fixed-odds betting terminals (FOBTs), which allow gamblers to bet every 20 seconds, will be cut sharply from the current level of £100, the department for digital, culture, media and sport said in a statement.
The maximum stake on "crack cocaine" gambling machines will be slashed from £100 to £2, it was announced today.
But Government bosses said the limit will cut the risk of potentiall large financial losses.
Figures published by stopthefobts.org show Deeside punters put almost £7.5m into the high stakes machines in 2016.
Its chief executive, Philip Bowcock, has told the BBC that a £2 FOBT limit would have a devastating impact on the High Street betting industry, with up to half of Britain's betting shops facing threat of closure and about 20,000 jobs going.
He said: 'Fixed-odds betting terminals are a scourge on high streets that have taken advantage of the vulnerable for too long'. "It's sad that huge profits seem to be of more importance than the wellbeing of the most vulnerable".
However, the move has prompted criticism from gambling companies, which have claimed the move puts thousands of jobs and hundreds of betting shops at risk.
The ABB said a report which paved the way for the new £2 rules was "deeply flawed" and had been funded by commercial rivals of Britain's bookmakers.
Apple has restocked batteries for mid 2012 and early 2013 MacBooks
In addition, an open petition on Change.org has gathered over 24,000 signatures in a call to hold Apple accountable for these defects.
But the machines are blamed for addiction, crime, debt, violence and family breakdown and their users are concentrated in some of the poorest communities.
She added: "It is right that we take decisive action now to ensure a responsible gambling industry that protects the most vulnerable in our society". We are increasing protections around online gambling, doing more on research, education and treatment of problem gambling and ensuring tighter rules around gambling advertising. "Today's move will have a short-term impact on our business, but we think it's a really important step towards building a sustainable industry".
London-listed gambling stocks, which were hit by the government's moves, have had a topsy-turvy week, surging on Monday after the Supreme Court paved the way to legalise sports betting in the United States.
A major multi-million pound advertising campaign promoting responsible gambling, supported by industry and GambleAware, will be launched later this year.
It pledged to work with the gambling sector to ensure it has sufficient time to introduce the stake reduction and technological changes.
Public Health England will carry out a review of the evidence relating to the public health harms of gambling.
And the age limit for playing National Lottery games will be reviewed under the next licence competition.
It added that the reduction would be linked to an increase in Remote Gaming Duty, a tax paid by online gaming operators, in a bid to protect the amount of income it gets from the industry.