The Government has published the Health Bill 2006 which provides an independent inspectorate of all nursing homes and residential centres for children and people with disabilities.
The Health Information and Quality Authority will set and monitor standards and will have the power to seek a District Court Order closing or suspending the operation of a home if its continued operation poses a risk to a resident.
Under the proposed legislation, existing nursing homes will have up to three years to continue under their current registration pending a visit by the new inspectorate.
It allows for fines of €70,000, imprisonment of up to two years, or both, for breaches of the planned new laws.
Around 100 inspectors will be required for the new system and homes will have a new registration period of a maximum of three years.
The Minister for Health and Children, Mary Harney, said an independent organisation with teeth was being created and that provision would be made to protect whistle blowers.
The Bill allows for the Health Service Executive to take over the running of a home or centre on a temporary basis to ensure residents are well looked after.
The controversy over the Leas Cross nursing home in north Dublin, and criticism of the existing nursing home inspection system had led to public demand for a new regime to protect older people.
The Irish Nursing Homes Organisation has welcomed today's publication of the Health Bill.
In a statement, INHO Chief Executive, Tadhg Daly, said: 'Currently the public sector, which accounts for 40% of all long-term beds, is not subject to legislative control and is not inspected.
'Allowing for the inspection of both public and private nursing homes by an independent inspectorate with legislative teeth is an essential part of reform of the nursing home sector'.