The Dogs Trust said caring for multiple litters required a lot of work
Stricter licensing for dog breeding in Wales could be introduced in an effort to regulate puppy farming.
Rural Affairs Minister Elin Jones announced a review of the law in a speech after new evidence of unlicensed premises was uncovered.
The assembly government is also considering whether to introduce compulsory microchipping of all dogs.
The RSPCA and Dogs Trust Wales welcomed the moves, saying the suffering some dogs endured was "terrible".
Ms Jones also confirmed she intended to impose a blanket ban on the sale and use of electric shock collars for dogs in Wales. Previously there had been a suggestion some exemptions would be permitted.
The assembly government has funded projects at local authority level to look at animal welfare issues including neglect and cruelty in so-called puppy farms, which it said was a serious concern.
Data gathered from the projects showed there were 249 unlicensed dog breeding premises in Wales.
While there was no specific evidence of welfare issues associated with those premises, Ms Jones said the figure warranted further investigation of the licensing requirements.
She said: "While the breeding of dogs for sale is a legal and legitimate trade, the production of puppies on a commercial scale with little or no consideration of welfare issues, is unacceptable.
"I will be establishing a task and finish group to review existing guidance on the licensing of dog breeding establishments, and look at whether existing legislation should be amended."
Ms Jones added: "In order to improve traceability of dogs, I will be encouraging voluntary microchipping while we consider the need to make microchipping compulsory."
Gethin Russell-Jones, of RSPCA Cymru, welcomed the two reviews and the prospect of a shock collar ban.
"It all looks good to us, and it's going to improve animal welfare, so we're delighted," he said.
"There's a huge issue with puppy breeding or puppy farms in Wales, particularly in Carmarthenshire, Pembrokeshire and Ceredigion.
"The environment in which these animals is kept is very often terrible and the suffering they endure is terrible.
"Anything which insists local authorities get more involved and take action to prevent this suffering can only be for the good, so we're happy about that."
He said microchipping would help to address the issue of lost and stray dogs.
"Microchipping is a very simple cheap procedure which means an animal can be traced within minutes or hours. A lot of heartache is resolved," he said.
Figures from the Dogs Trust charity showed the number of stray and abandoned dogs in Wales had risen by over 25% between 2008 and 2009, up to 12,232.
Sian Edwards, from Dogs Trust Wales, said at present people who were breeding from five dogs or more were supposed to be registered with their local authority.
However, she pointed out if the dogs were not chipped, there was no way of knowing if the same animals were being used when the council came back to check on them.
She said staffing levels at breeders were a concern, adding: "A couple of litters is a hell of a lot of work and there are issues of manpower to make sure there are enough staff to be able to care for the dogs."
On microchipping for dogs in general, she said: "Microchipping is the best protection for the dog and peace of mind for the owner.
"This is a one-off fee to get the dog micro-chipped.
"It's also an issue of responsibility - if you get the dog chipped, you have a duty of care towards it."