Pubs and clubs in Reading may have to buy a special permit and abide by costly regulations to let people smoke outside.
Paying for staff to man a designated smoking area, plus a £220 annual fee, would be necessary under controversial council plans.
A temporary barrier "of a quality and style" approved by the council must be used, and removed outside permitted hours. No food or drinks would be allowed in the area and the licensee would be responsible for clearing butts inside and "beyond" the space.
Consent for the area could be withdrawn at any time without compensation.
The proposal comes from Reading Borough Council's senior licensing and enforcement officer, Jean Champeau. It will be discussed at a council committee meeting this week.
Champeau said "a number" of venues asked, with support of police, to find a way to "regulate" smoking areas.
"The licensed trade is keen to have areas that have been approved to a set standard. Police seek to ensure that all such areas are set out and controlled in such a way that they do not lead to increased crime and disorder."
Bernie Whiten, licensee of the Retreat in Reading, said: "We are an example of the sort of small, backstreet pub without the possibility of food or a smoking area, other than the street in front, which was badly affected by the smoking ban.
"This [proposal] would add insult to injury, and is an example of the stealth taxation and rising costs small businesses are plagued by."
MA legal editor Peter Coulson said: "This could be seen as being on the edge of legality."
He said, having people smoking outside doesn't relate to the activities of the pub as it is not connected to the services offered.
"There isn't a legal requirement for such a licence. This is breaking new ground."
Reading Pubwatch chairman Bill Donne said the move "formalises" a voluntary arrangement where venues had cordoned-off areas outside for smokers.
"Pubwatch wouldn't welcome any additional costs to its members. But how do you justify people increasing capacity on pavements for free where other operators pay for tables and chairs outside the premises [through a pavement licence]?"