The annual gathering of the world governing body, the FIFA Congress, has agreed new measures that mean teams could be relegated or expelled from competitions for incidents of racism.
First or “minor” offences will result in either a warning, fine or order for a match to be played behind closed doors.
Repeat offences can now be punished by a points deduction, expulsion or relegation.
The new rulings standardise punishment across the members, meaning federations at a national level will lose the power to impose their own judgements outside of the two-step process.
Jeffrey Webb, head of FIFA's anti-discrimination task force, said the decision was “a defining moment”.
He added: “Our football family is fully aware that what is reported in the media is actually less than 1% of the incidents that happen around the world.
“We've got to take action so that when we look to the next 20 or 50 years this will be the defining time that we took action against racism and discrimination.”
Fifa, world football's governing body, passed the resolution with a 99% majority at its congress in Mauritius.
Nonetheless, FIFA president Blatter accepted more must be done to eradicate racism.
He said: “We need zero tolerance and strict punishments everywhere. We must lead. We must set a tough, uncompromising example. We can make a difference.”
FIFA commissioned a task force to address the issue of racism after a friendly game between AC Milan and Pro Patria was abandoned due to racist chanting.
The Task Force has agreed to deal with educational and preventative measures in the coming meetings.
Their verdict includes putting an official inside the stadium to identify potential acts of racism and ease the pressure on the match referee.
Further to the regulations that relate to clubs or international teams, the new measures will see any individual, such as a player or official, who commits a racist offence banned from stadiums for a minimum of five matches.