The bill, which needs approval in the City Council, would make New York the first US city to adopt such a measure and is the latest initiative in Bloomberg's war on smoking and other unhealthy habits.
The billionaire former smoker said keeping cigarettes hidden would help reduce smoking rates among youngsters who could be tempted to buy a pack along with the sweets and other goodies often arrayed nearby.
"New York City has dramatically lowered our smoking rate, but even one new smoker is one too many -- especially when it's a young person," Bloomberg said.
"Young people are targets of marketing and the availability of cigarettes, and this legislation will help prevent another generation from the ill health and shorter life expectancy that comes with smoking."
Under the legislation, sellers would have to tuck away cigarettes except during restocking or sales to customers.
"Tobacco products would be required to be kept in cabinets, drawers, under the counter, behind a curtain or in any other concealed location," the mayor's office said.
The mayor has previously banned smoking in restaurants and bars, and more recently in parks and on beaches. He has also instituted a highly visible grading system for hygiene in all city restaurants and cafes.
But Bloomberg, who is nearing the end of his third and final term in office, suffered a setback last week when a judge blocked his imposition of a ban on giant soft drink portions.
In a speech in February, Bloomberg raised the prospect of another eye-catching crusade: outlawing Styrofoam cups and plates from food outlets.