The announcement from Appropriations Chairman Dave Obey, D-Wis., addresses the large number of defense contractors who are routinely awarded no-bid contracts.
One thousand earmarks from 2009, including many multimillion-dollar contracts, would have been banned under the new rules, The New York Times reported.
Non-profit entities including universities and research groups are still eligible for earmarks, but 5 percent of those awards will be audited to inspect for corporate involvement.
"These new policies are not intended to be a one-year experiment. They are intended to be a long-term proposition," Obey said.
House Minority Leader John Boehner, R-Ohio, proposed an across-the-board ban on earmarks, saying: "I think it's appropriate for our members to have a conversation about an earmark moratorium, and I'm talking about a real moratorium. There is no way to be half-pregnant on this issue."
The Senate would have to set similar rules for the new restrictions to work.
"I don't believe this policy or ceding authority to the executive branch on any spending decision is in the best interests of the Congress or the American people," Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii, said.
"In my view, it does not make sense to discriminate against for-profit organizations. I am not sure why we should treat for-profit earmarks any differently than non-profit earmarks."
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