Zero-hours contracts have become increasingly common in recent years
Business Secretary Vince Cable has ruled out a complete ban on zero-hours contracts, saying they offered employers welcome flexibility.
Launching a consultation on their use, Mr Cable said the contracts had a place in the labour market even though there had been evidence of abuse of rights.
Companies could be barred from having exclusivity contracts that stop people working for another firm.
Zero-hours contracts do not guarantee regular work for employees.
The consultation will last 12 weeks.
Business leaders welcomed the move not to ban zero-hours contracts but union bosses said the government was desperately short on solutions to restrict their use.
Mr Cable said: A growing number of employers and individuals today are using zero-hour contracts.
While for many people they offer a welcome flexibility to accommodate childcare or top-up monthly earnings, for others it is clear that there has been evidence of abuse around this type of employment which can offer limited employment rights and job security.
We believe they have a place in todays labour market and are not proposing to ban them outright but we also want to make sure that people are getting a fair deal.
He added: Our research this summer gave us a much needed insight into both the positive and negative aspects of zero hours contracts.
Our consultation will now focus on tackling the key concerns that were raised, such as exclusivity clauses and how to provide workers with more protection.
We dont think that people should be tied exclusively to one employer if it unfairly stops them from boosting their income when they are not getting enough work to earn a living.
We also want to give employees and employers more guidance and advice on these types of employment contracts.
Employers need flexible workforces and people should have the choice in how they work. But this shouldnt be at the expense of fairness and transparency.
The British Chambers of Commerce welcomed the governments consultation.
Call centre workersEmployees on zero-hours contracts may not receive certain benefits
Head of employment John Wastnage said: Zero-hours contracts are valued by many workers and employers but there isnt a clear definition of what they are or how they should work.
Alexander Ehmann, of the Institute of Directors, said: This consultation underlines how important a varied and flexible labour market is to our economy, and quite how out of touch those arguing for an indiscriminate ban on this casual form of work were.
But Frances OGrady, general secretary of trade union organisation the TUC, said: The growth of zero-hours contracts is one of the reasons why so many hard-working people are fearful for their jobs and struggling to make ends meet, in spite of the recovery.
But while the government has identified some of the problems faced by those with zero job security, its desperately short on solutions to curb the use of these contracts.
Zero-hours contracts mean employees only work as and when they are needed by employers, often at short notice, and are only paid for the hours they work.
Some of these contracts oblige workers to take the shifts they are offered, others do not.
Sick pay is often not included although holiday pay should be, in line with working time regulations.