China is to scrap the distinction between its urban and rural household registration systems, it said, promising migrant workers greater social benefits as it pushes an urbanisation drive that has seen hundreds of millions of people move to cities.

The country will implement a single household registration -- or "hukou" -- system, said the State Council, or cabinet.

The move would address the decades-long divide that denies rural dwellers equal access to services such as healthcare and education if they moved to the cities.

But a system of "residence permits" will be introduced and the population of China's major cities will still be "strictly controlled", the State Council said in Wednesday's statement, ruling out automatic benefits for all.

The hukou system has long caused resentment among China's vast migrant population, currently estimated at 245 million, and the Beijing News newspaper on Thursday carried a story saying that President Xi Jinping had proposed reforms to it in his PhD thesis in 2001.

"Most farmers working in cities have not really integrated into the cities," it quoted him as saying. "The root cause of this problem is the limits of the household registration system."

The extent of the changes will depend on the size of the cities involved, the State Council said, with migrants entitled to a full hukou in cities and towns of less than 500,000 people as long as they own or lease a "legal and stable" home.

More conditions apply in larger conurbations, it added, but by 2020, 100 million people will have new registrations in cities.

Migrants who have not obtained a full hukou will be able to receive some public services as long as they hold a residence permit, the statement said.

Children of migrant workers with permits will be gradually and conditionally allowed to take education entrance examinations for schools and universities, from which they are often barred, it said -- an emotive issue that has caused widespread grievances and protests.

Rural residents should not have to give up their existing land use rights in exchange for an urban hukou "at the current stage", the statement said.

Analysts lauded the reforms as part of a broader effort to make consumption a key driver of Chinese growth and reduce decades of over-reliance on often inefficient infrastructure investment.

"We have long argued that the real barrier to China's urbanisation is the backward and unfair rural land ownership system, and now we finally see some real breakthrough," said Bank of America Merrill Lynch economists in a research note.

But Chinese Internet users remained sceptical on the impact of the new policy.

"This is just a change in name," wrote one poster on China's Twitter-like Sina Weibo. "Gaps will remain in the social welfare enjoyed by urban residents and farmers."