Oil ministry officials said on Wednesday that each vehicle owner can have 50 litres at the price of 20 dinars (one US cent) per litre.
In the northern capital of Mosul, however, drivers were being limited to half that amount, reported an AFP correspondent there.
Oil ministry spokesman Asam Jihad said petrol station operators who sell to the black market will face lengthy jail terms under a new law effective on Wednesday.
Motorists say queues for petrol, some as long as 3km, have become increasingly common since the Muslim holy month of Ramadan ended in late November.
Jihad said that because of the oil shortage, interim oil minister Ibrahim Bahr al-Ulum has cancelled a trip to Cairo where he was to meet with Arab oil ministers.
On Sunday, Jihad had been quoted as saying that Iraq was suffering only a temporary shortage of oil and not a crisis.
He said on Wednesday that an agreement between the oil and electricity ministries will ensure day and night power for pumps at 24 Baghdad petrol stations in another measure aimed at addressing the problem.
The capital is subject to rotating power blackouts.
Roadside black marketeers bearing jerry cans are a frequent site on city streets and some have been detained by American soldiers.
Lieutenant General Ricardo Sanchez, the commander of coalition ground forces in Iraq, recently denied the black market had anything to do with the fuel problem, saying “significant progress” has been made against smugglers.
Protests became violent in August
The oil ministry said it had formed a joint task force with the US-led coalition to “examine the supply challenges, black market activities and public perception issues that are causing fuel lines around the country.”
Among the remedies to be considered by the task force is the possible use of US military vehicles to supplement Iraq’s tanker fleet.
The task force will look at keeping petrol stations open longer, issuing licences for new stations and improving security for the distribution network.
It will also consider the expansion of commercial relationships with Iraq’s neighbours and speeding up reconstruction of Iraq’s dilapidated fuel infrastructure.
The task force announcement comes three days after a coalition civilian spokesman said the petrol problem would be resolved soon following the arrival on Sunday of more than four million litres of fuel from Turkey.
Jihad said Iraq has also signed a contract with Iran for millions of litres and expects to sign a contract with Kuwait.
Officials also plan to visit Saudi Arabia and Qatar to explore the possibility of buying from those countries, he said.