The use of the term in an official report, thought to be unprecedented, comes as authorities face growing discontent over industrial waste, hazardous smog and other environmental and health consequences after years of rapid development.
"Poisonous and harmful chemical materials have brought about many water and atmosphere emergencies... certain places are even seeing 'cancer villages'," said a five-year plan that was highlighted this week.
The report did not elaborate on the phenomenon, which has no technical definition but gained prominence in domestic and foreign media after a Chinese journalist posted a map in 2009 pinpointing dozens of such "cancer villages".
But the ministry acknowledged that in general China uses "poisonous and harmful chemical products" that are banned in developed countries and "pose long-term or potential harm to human health and the ecology".
Environmental lawyer Wang Canfa, who runs an aid center in Beijing for victims of pollution, said Friday it was the first time the "cancer village" phrase had appeared in a ministry document.
"It shows that the environment ministry has acknowledged that pollution has led to people getting cancer," he said. "It shows that this issue, of environmental pollution leading to health damages, has drawn attention."
A ministry official who declined to be named could not confirm whether it was the first time it had used the phrase, but said it had previously acknowledged the connection between the environment and human health.