The government has decided to increase cigarette prices to an average of SFr6.90 ($5.80) a pack.
The finance ministry said the 30-centime hike, to come into effect in March, was part of health prevention efforts and was aimed at generating more tax revenue.
Experts say the gradual increase in cigarette prices since 2001 has led to a marked drop in sales and has helped reduce the number of smokers by 150,000.
However, sales of smuggled tobacco products on the black market are believed to have remained unchanged.
About 12.4 billion packs were sold last year resulting in SFr2 billion in tax revenue according to the authorities.
A joint report by the federal health and customs offices welcomed the government's price policy, which is in line with those of neighbouring countries.