Sport Minister Jose Ignacio Wert said once the bill is passed by Parliament, "the impression that (Spain) lacks toughness on doping will disappear."
The bill includes the expansion of doping tests for athletes to overnight hours, allows for fines up to $520,000 and creates a new national anti-doping agency with greater powers and an additional focus on sports health.
Spain's first anti-doping law was passed in 2006. The previous lack of doping legislation harmed Spain's image on doping and hampered police investigations like Operation Puerto, the blood-doping case currently under trial in Madrid.
The harsher punishments will not include jail time for doping cheats.
Wert said the government will push for quick legislative passage of the bill and he expects it to be passed and in effect "by June or July."
The new law comes at a key stage in Madrid's bid for the Olympics. The IOC evaluation commission will visit Madrid on Mar. 18-21 to assess the bid, including anti-doping measures.
Madrid, bidding for the games for a third straight time, is competing against Tokyo and Istanbul. The IOC will select the 2020 host city in September.
"Madrid's prior bids were questioned by some sectors because of Spain's anti-doping legislation," Wert said. "This law bolsters its bid. ... The new law wasn't passed because the committee is coming in 10 days. But if it helps the bid, then that is positive."
Among measures directed at sports health, the new law will require sports facilities to be equipped to deal with emergencies related to heart and breathing problems.