Councils will have to consider whether residents support Low Traffic Neighbourhoods (LTN) in their area before going ahead with schemes.
LTNs are designed to encourage cycling and walking by limiting driving in side roads and include segregated cycle lanes, wider pavements and barriers to restrict vehicles.
Supporters argue the measures cut noise and air pollution, encouraged people to opt for more healthy and environmentally friendly types of travel, and help businesses with extra footfall.
But critics believe while they may have improved areas where they are located, they push the problems elsewhere, while many LTNs are also not recognised by satnav leading to traffic snarl-ups.
In a bid to address the division, the Department for Transport (DfT) has published draft guidance for councils on LTNs - coming into force this summer - setting out they must get support from locals.
If councils fail to deliver road schemes that work for local people, they could see future funding withdrawn and the government could take control of an authority's roads.
It comes after a review uncovered concerns over LTNs, including potential risk to life from emergency services delays, impact on disabled residents and high numbers of Penalty
Charge Notices.
Labour called it a "a blatant and desperate attempt to distract people from a government that has run out of road".
Transport Secretary Mark Harper said the government is on the side of drivers: "We want local people to have their voices heard, and any traffic schemes to have the consent of those they impact."
A review showed only 13% of residents responded to councils' planning consultations on LTNs and 18% feel their views have influenced council decisions.
New 20mph guidance
The report also found local authorities operating LTNs issue an average of 36,459 Penalty Charge Notices per scheme, with the highest number of notices issued exceeding 170,000.
Councils have also received "strengthened guidance" on setting 20mph speed limits, reminding them to reserve them for sensible and appropriate areas only, like outside schools.
Local authorities will also be encouraged to install noise cameras, which have been found to help in cracking down on illegally modified exhausts and anti-social drivers.
Shadow transport secretary, Louise Haigh, said this "ongoing Conservative chaos" has a "real cost for working people and our public services".
"Working people want answers on the soaring cost of living, the woeful state of our transport infrastructure, and how the Tories are planning to fund their £46bn of unfunded spending commitments that threaten the health service and risk the state pension as we know it," she added.
"Labour will act on the real priorities of drivers by tackling soaring car insurance costs and the traffic clogging up our roads.
"And we will leave decisions over local roads where they belong: in the hands of local communities."