More than half the pubs and a third of off-licences targeted during a summer crackdown on underage drinking sold alcohol to under-18s.
Pubs and off-licences which sell to under-18s face stiffer penalties
Home Secretary David Blunkett will now send warning letters to major pub and off-licence chains.
It follows a sting operation which found that, of 1,825 premises targeted, 51% of licenced premises and 32% of off-licences sold alcohol to under-18s.
The joint Home Office and police push led to 4,000 on-the-spot fines.
Mr Blunkett, in Plymouth on Friday to report on the operation, said pubs and off-licences which broke the law faced stiffer penalties.
During the eight-week summer crackdown, police and trading standards officers carried out sting operations on 1,825 pubs and off-licences.
Of these 51% of the licensed premises targeted (191) and 32% of off-licences (466) were found to be selling to under-18s.
Officers arrested 5,764 people, handed out 4,000 fixed penalty fines and confiscated alcohol from more than 9,500 adults and under-18s.
Mr Blunkett said he recognised the "good work" done by many in the industry but would be writing to warn establishments that continued to sell to minors.
He also plans to ask magistrates to give tougher sentences to offenders who use alcohol as an excuse.
He said: "I am determined to tackle the irresponsible and illegal selling of alcohol identified during the campaign.
"Gaining the confidence of communities affected by alcohol-fuelled crime is vital."
Ministers said the crackdown, which ran from Thursday to Sunday evenings through July and August, will be repeated at regular intervals.
Officers also visited more than 30,500 premises this summer in 92 communities across England and Wales, of which 4% were found to have committed an offence.
Association of Chief Police Officers (Acpo) spokesman and Nottinghamshire chief constable Stephen Green said the crackdown was only the first step.
The home secretary toured Plymouth's pub and nightclub strip around Union Street on Thursday to examine the city's efforts to curb anti-social behaviour.
The nearby streets benefit from special "dispersal areas" where police have powers to break up groups or order them to move away.
Late-night buses with police escorts are also being used to remove boisterous groups from the city centre.
Minister Hazel Blears, speaking on BBC Radio 4's Today programme, criticised cheap drink promotions.
She said: "It's unacceptable to have a situation where it is 'all you can drink for £10' or 'girls drink free'.
"That is a recipe for disaster and the sort of violence we see on our streets."
Alcohol Concern spokeswoman Geethika Jayatilaka called for businesses which break the law to be "named and shamed".
And Trading Standards Institute chief executive Ron Gainsford said: "Unfortunately, it seems there are still too many who, through greed or apathy, are happy to profit from this illegal trade."
Mark Hastings, spokesman for the British Beer and Pub Association, said: "The results show that there is a small minority tarnishing the industry's good name."
The Portman Group, which promotes responsible drinking, provides a Proof of Age card to help retailers.
Its chief executive, Jean Coussins, said: "There is no excuse for the minority of pubs and off-licences that sell to under-18s."