More than one million Muslims are reportedly being held in the Xinjiang region in the west of the country in internment camps.
The revisions, published on Tuesday, say government agencies at the county level and above "may establish occupational skills education and training centres, education transformation organisations and management departments to transform people influenced by extremism through education".
China has been subject to heavy criticism from rights groups and foreign governments amid reports of a punitive crackdown that has seen the detention of as many as 1 million mostly Muslim ethnic Uighurs in Xinjiang.
Amid worldwide condemnation and concern, China has repeatedly denied the existence of these camps, at least semantically, declaring that there are no "re-education camps" or "counter-terrorism camps" in Xinjiang, only "vocational education and employment training centers" which help those individuals charged with criminal misdemeanors acquire "employment skills and legal knowledge" and assist in their "rehabilitation and reintegration" back into society.
In 2017, China banned activity deemed "extremist" was banned, including wearing a headscarf, having "abnormal" beards, refusing to follow state media, or preventing children from receiving state education.
The new regulations in Xinjiang effectively provide a legal basis for those centres.
China says Xinjiang faces a serious threat from Islamist militants and separatists. China has come under increasing pressure from the USA and the European Union after a United Nations panel confronted Chinese diplomats in August over reports of arbitrary mass detentions and harsh security measures aimed at Muslims.
China's far-western Xinjiang region has revised its legislation to allow local governments to "educate and transform" people influenced by extremism through "vocational training centres" - a term used by the government to describe a regional network of extrajudicial internment centres known as "re-education camps".
In a meeting on Monday, the Communist Party leaders of Urumqi city led cadres to swear an oath to "fight a decisive battle against "pan-halalisation", according to a notice posed on the city's official WeChat account.
The official Global Times said on Wednesday that the "demand that things be halal which can not really be halal" were fuelling hostility towards religion and allowing Islam to penetrate secular life.