The government has outlined plans on drastically slashing the maximum stake on fixed-odds betting terminals (FOBTs) – dubbed the "crack cocaine of gambling".

In a review published on 31 October, the Department for Digital, Culture, Media and Sport (DCMS) said it would fix the maximum bet on the machines somewhere between £2 and £50.

At present, high street betting shops which house FOBTs allow customers to bet up to £100 every 20 seconds on electronic games such as blackjack and roulette.

Critics say the machines induce an unhealthy gambling style as the high-speed nature of the games encourages customers to chase their losses and place higher bets.

The DCMS review said current government regulation of FOBTs is "inappropriate" and that the maximum stake amount must be cut to "reduce the potential for large session losses and therefore to potentially harmful impacts on players and their wider communities".

Betting industry figures and campaigners will now be provided with a 12-week consultation period during which they can lobby for what they believe will be the most appropriate maximum bet, after which the final limit will be set.

The review also urged bookmakers to promote responsible play in online gambling, which now accounts for 44% of the commercial gambling sector, with 1 out of 10 adults across the UK taking part in the activity.

However, the review indicated that gambling adverts on television before the 9pm watershed will not be curbed.

"The Gambling Commission is examining the online sector and encouraging operators to increase action to identify harmful play, design and pilot better interventions and put in place measures that work," DCMS minister Tracey Crouch said.

"We want to see the online sector fully engage with these objectives and this programme of work."

Shadow Culture Secretary Tom Watson called the government's response "deeply disappointing".

"Ministers have squandered a real opportunity to curb highly addictive fixed-odds betting terminals, which can cause real harm to individuals, their families and local communities," he said. "After months of delays they've simply decided to have another consultation.

"Instead of taking firm measures on the proliferation of gambling advertising, on TV and online, the government have again been found wanting."