Authorities in Falkirk, Stirling and Clackmannanshire hope the proposed policy will protect the under-fives and other vulnerable young people from the harmful effects of passive smoking, which include increased risk of cot death, pneumonia, bronchitis, asthma and ear diseases.
The number of children needing placements in foster and care homes or with adoptive parents in Falkirk has risen from 172 in August 2006 to 244 in August 2008.
Falkirk Council will decide its policy next Tuesday. If it is passed, smokers will be banned from adopting or fostering any child under five or those with a disability or respiratory problems, asthma or heart disease.
The policy also rules that children from non-smoking families should not be placed with families who smoke.
All older children who are able to express a view must be given a choice about being placed with a smoking family.
Falkirk has around 80 young people who need to be found foster or adoptive parents, and opinions are divided between foster carers and health campaigners as to whether the plans intrude on personal freedoms and may deter prospective parents from coming forward.
The move comes after a blanket ban on smokers becoming foster carers was passed this week in the London borough of Redbridge.
Margaret Anderson, head of services for children and families at Falkirk Council, said many Scottish councils were taking similar measures.
She told The Scotsman: "We are making these recommendations because of the very strong advice from the British Association for Adoption and Fostering and the Fostering Network that this is best practice."
She said many issues had to be taken into consideration, but in her experience few foster parents or prospective parents were smokers.
Health bodies are backing the council's stance. Gordon Brown, public affairs manager for Asthma UK Scotland, said: "A child's welfare should be paramount when taking any decision which affects their health, and for those with asthma the effects of smoking can be deadly.
"It can increase the risk of an asthma attack, permanently damage someone's airways and block the benefit of some asthma medicines.
"We know that children whose parents smoke are 1.5 times more likely to develop asthma and we consider it vitally important to reduce this risk to children."
Childcare agencies have pointed out that councils find themselves in very difficult positions.
Maggie Mellon, a spokeswoman for Children 1st Scotland, warned that by focusing on parents, the council could be seen to be judging adults rather than protecting children.
She said: "You can be a smoker and a good parent, the thing is not to inflict the smoking on the child.
"What is the lesser of two evils – a child stuck in a care home or a loving parent who commits to never smoking in the house?
"A middle road would be to get the parent to guarantee not to smoke in the house.
"But where do you draw the line? Councils have a statutory duty of care to the child and are probably worried about being sued years down the line, after a foster carer allowed a child to smoke who subsequently developed health problems."
THE British Association for Adoption and Fostering (BAAF) published medical guidelines last year which are being taken up by a growing number of councils across Scotland.
These warn that children are particularly susceptible to the effects of second-hand smoke due to their small lungs and airways, and immature immune systems. Children are consequently more likely to develop respiratory and ear infections. According to BAAF, children will also breathe in more harmful chemicals per pound of bodyweight.