A proposed amendment to the Crime and Security Bill would give councils the power to make early morning alcohol restriction orders, preventing licensed premises in a defined area selling alcohol between 3am and 6am.
This is the first time powers have been granted to issue a blanket restriction, rather than targeting individual premises.
Association of Convenience Stores chief executive James Lowman said: "This amendment has wide repercussions. It challenges the principle of the Licensing Act 2003, under which every premises must be judged on their own merit.
"The introduction of blanket powers for councils is a worrying shift. It is even more concerning that these powers could be made into law without sufficient consultation with the trade."
The small number of c-stores and forecourts which have a 24 hour licence would suffer, he said, as the new powers would have the potential to limit the range on offer to customers.
Government has launched a 12-week consultation with the trade on the regulations.