The province said Friday it will introduce legislation to ban payments, boost enforcement in case of violations and broaden the requirements for licensing blood collection facilities.
It also proposes to amend two regulations to immediately enact the payment prohibition for laboratories and specimen collection centres.
The provincial government has raised concerns about three paid-donor blood clinics being set up in Ontario.
Canadian Plasma Resources lists two clinics in Toronto and one in Hamilton. It said Friday paid donations help meet the demand for plasma to be manufactured into pharmaceutical products.
"The fact is Canada's need for plasma significantly exceeds our ability to produce it," the company said in a statement.
"There is no evidence that compensating plasma donors weakens the voluntary donor system," it added, noting Manitoba has allowed compensation for plasma donations for at least 25 years.
There is currently no law in Ontario preventing clinics or labs from paying blood or plasma donors, but at least one other province — Quebec — has outlawed the practice.
The federal government said last year the matter falls under provincial and territorial jurisdiction.
Ontario's ministry of health said the proposed legislation is consistent with the final report into the tainted-blood scandal, which recommended donors should not be paid, except in rare circumstances.
The federal government launched a public inquiry in 1993 after thousands of people were infected with HIV and hepatitis C through tainted blood transfusions in the 1980s.
Justice Horace Krever spent four years in his investigation and made 50 recommendations when he issued his report in 1997. Among them was tighter rules for blood services and no-fault compensation for the victims.
"Since the Krever inquiry, we have built a public blood system in Canada that is safe, effective and integrated," Dr. Graham Sher, CEO of Canadian Blood Services, said in a release.
"There is no meaningful rationale for altering Canadian Blood Services' current, sustainable system of managing the blood and blood products supply for Ontarians."