Indonesia has rejected applications from scores of companies for new palm oil operations, an official said Wednesday, as it cracks down on an industry whose expansion has been blamed for fuelling haze-belching forest fires.

Almost one million hectares (2.5 million acres) of land were spared from conversion to palm oil plantations due to the decision, said San Afri Awang, a senior official from the environment and forestry ministry.

"We want to save our forests -- development should continue but we can't let it destroy our environment," he told reporters in Jakarta, after announcing that applications from 61 companies had been rejected.

It came after the government this month announced it would stop granting new land for palm oil plantations in the world's top producer of the edible vegetable oil, a key ingredient in everyday goods, from biscuits to shampoo and make-up.

President Joko Widodo called for planters to increase their yields by using better seeds, rather than expanding into new areas.

Plantations on Sumatra island and the Indonesian part of Borneo have expanded as demand for palm oil has skyrocketed, but the growth has been blamed for annual forest fires that occur during the dry season due to illegal slash-and-burn land clearance.

The 2015 blazes were the worst for years and cloaked swathes of Southeast Asia in toxic smog, causing tens of thousands to fall ill and leading to flight cancellations and school closures.

Awang refused to give any details about which companies had their applications rejected, or to say whether they were for new plantations or expansions to existing plantations.

Kiki Taufik, Greenpeace Indonesia forest campaigner, welcomed the move but cautioned the government must ensure that local authorities enforce the decision.

"Often these companies are rejected by the central government but then they start lobbying the regional government," he said.

Implementation of laws is difficult due to heavy decentralisation of power across the archipelago of more than 17,000 islands, with rules set in Jakarta often flouted by local administrations.