The Premier League has announced that from next season every team must name a squad of 25 players, of which eight must be home grown.
A home grown player is any player who has played for an English or Welsh club for three years before their 21st birthday.
At present every Premier League club already passes the test, though Chelsea and Liverpool both have the bare minimum of eight.
In addition, there will be tighter controls on the spending of top flight clubs.
Premier League chief executive Richard Scudamore revealed: "As of next season clubs will be required to have a squad named of up to 25 players, of which no more than 17 can be over the age of 21 and not home grown.
"The definition of home grown is trained for three years under the age of 21 by somebody in the English and Welsh professional system. Clubs will have to declare their 25 at the end of August when the window shuts and then again at the end of January.
But Scudamore was quick to rubbish suggestions that the rule would encourage Premier League clubs to sign foreign teenagers to train in their Academy for three years.
"It's not in the club's interests to stockpile players. It will make buying home-grown talent more attractive,'' he insisted. "We're not going down the route of a nationality test but what this will mean is that you just can't buy a team from abroad.
"We think it will give clubs an extra incentive to invest in youth. We think that one of the benefits will be that it will help the England team.''
The Premier League will also introduce strict new controls on clubs' finances.
"They will all have to annually submit accounts and future financial information,'' said Scudamore. "At all times the board of the Premier League will be applying a test which basically says this: can the club fulfil its fixtures, pay off its creditors when they are due and also to meet obligations to the Premier League's contracts and partners?
"If the board believe a club is at risk of not meeting those obligations, it has to then step in and agree a budget for the running of that club. Any transfers can be embargoed. It's absolutely crucial that these clubs are run as ongoing viable concerns. These financial rules apply immediately.
"This is tied in, and we passed the rule during the summer, to a 'fit and proper person test'. At our club meeting last week, the clubs absolutely endorsed our position of not linking expenditure to income.''