Business minister Michael Fallon (pictured) announced that the freeze, exempting firms with fewer than 10 employees from "burdensome" new regulations, would now be extended to companies with up to 50 staff.
Under a rigorous cross-Government assessment process, firms will also be exempt from new regulations. If there is any evidence that they will result in disproportionate burdens that could impede growth.
if the rules are absolutely essential, SMEs will be given extra time to comply.
Previous successes of the freeze include exempting those companies with under 250 staff from the right to request time to train, a move the Government claims saved firms £388 million.
"We all want faster growth. As Britain recovers, small businesses are leading the generation of ideas, the creation of new jobs and the shift towards a balanced economy," Fallon said.
"On my watch, new regulations will now only extend to small businesses if they are essential, justified, and where disproportionate burdens are fully mitigated."
Fallon added: "Where regulation is not fit for purpose it will be reformed or binned."
John Allan, national chairman of the Federation of Small Businesses, said: "The burden of regulation often falls heaviest on the smallest of firms.
"This announcement should mean that business owners will be able to devote time to growing their business and creating jobs, rather than form-filling."
The British Chambers of Commerce said it will "keep an eye" on the new policy to ensure that it is actually making a difference to firms, rather than just becoming another failed attempt to curb the explosion of red tape.
