The children's services watchdog has published a consultation outlining changes it wants to make to the way that nurseries, pre-schools and childminders are inspected.
Under the plans, the existing "satisfactory" rating will be replaced with "requires improvement" and settings that achieve this grade will face more frequent inspections and have four years to become "good".
Nurseries and pre-schools that fail to move up from "requires improvement" to "good" after two consecutive inspections are likely to be judged "inadequate".
And inadequate-rated settings that do not improve by the time of their next inspection will face having their registration cancelled.
Ofsted's chief inspector Michael Wilshaw said: "We must be tougher on weak settings.
"From September 2013, nurseries and pre-schools judged less than good will need to improve rapidly.
"I want the new designation of "requires improvement" to act as a catalyst to get all early years providers to "good" as soon as possible."
He added that good and outstanding early years services will be encouraged to help those deemed less than good.
"We know that the best schools are joining forces and we anticipate that this will happen in the early years," he said.
Neil Leitch, chief executive of the Pre-School Learning Alliance, said changing the rating description would make no difference to quality if settings lacked the support they need to improve.
"The government is soon to remove the role that local authorities play in supporting their local settings and training support for the sector has been reduced by 40 per cent in the last year," he said.
"At the same time the government is proposing that nursery workers look after up to 50 per cent more children – a move that parents themselves overwhelmingly oppose.
"While we welcome the aspiration of high-quality childcare, without a rethink on policy and adequate funding from government, we struggle to see how a real improvement will be made."
Ofsted's consultation on the plans is open until 24 May.