The display ban applies to shops covering more than 280 square metres (3,014 square feet). Those in breach of the law could face a fine up to Ģ5,000 ($7,930, 6,070 euros) or even imprisonment.
Smaller stores are exempt from the ban until 2015.
"We cannot ignore the fact that young people are recruited into smoking by colourful, eye-catching, cigarette displays," health minister Anne Milton said.
"Most adult smokers started smoking as teenagers and we need to stop this trend.
"Banning displays of cigarettes and tobacco will help young people resist the pressure to start smoking and help the thousands of adults in England who are currently trying to quit."
It is illegal to sell tobacco in Britain to anyone under the age of 18, though different parts of the United Kingdom have their own legislation regarding smoking.
Smoking in enclosed public places was banned in England in July 2007.
The government is consulting on introducing plain packaging for packets of cigarettes and other tobacco products.
Health Secretary Andrew Lansley told BBC television: "We want to arrive at a place where we no longer see smoking as a normal part of life. We're doing it by stages with constant, active pressure.
"The culture is about moving to a place where... people don't encounter it normally: they don't see it in their big supermarkets, they don't see people smoking in public places, they don't see tobacco vending machines."
Around a fifth of adults in Britain are smokers.