The move met with approval from the Spanish Players' Union (AFE) who had listed the practice as one of their chief grievances when they called a strike that delayed the start of this season's league competition.
"This reform... will prevent the undesirable use and abuse of certain instruments of the bankruptcy law and ensure stability and equality in sports competitions," the government said.
An increasing number of debt-laden clubs have gone into administration recently, whereby Spanish law can override competition rules that could have lead to them being relegated for failing to pay their players.
A number of sides in La Liga have sought refuge from creditors, recent examples being Real Zaragoza and Racing Santander, as have more than half of second division clubs.
Rival clubs say the rules surrounding the bankruptcy process have been abused as an easy way for struggling teams to get out of their predicament and preserve their league status.
"This change has been one of the main demands of the AFE for the past 18 months, achieved by the efforts of all the players," the players' union said in a statement.
"The main change is that any club starting insolvency proceedings will not be able to prevent the application of the rules governing participation in sporting competition."
