"From now on, members of the government must prefer France for their holidays," Sarkozy told a cabinet meeting, according to a transcript released by his office.
"Invitations accepted abroad will be authorised by the prime minister and the presidential diplomatic unit... to see whether they are compatible with France's foreign policy".
Prime Minister François Fillon on Tuesday admitted that embattled Egyptian President Hosni Mubarak had paid for his family holiday over New Year on the Nile.
Fillon's admission hit the government hard after controversy surrounding Foreign Minister Michèle Alliot-Marie's use of a private plane owned by someone close to ousted Tunisian President Zine el-Abidine Ben Ali.
"What was common a few years ago can shock nowadays. So it must be strictly monitored," Sarkozy said.
Jean-Louis Roumegas, spokesperson for the minority green party Europe-Ecologie-Les Verts said "The Sarkozy system has erased the line between power and money".
"Now a minister sees nothing abnormal in using an oligarch's plane or having his holidays paid for by a dictator. That's the most serious thing".