The revised law in the Xinjiang Uygur autonomous region, which takes immediate effect, comes amid rising worldwide attention on the secretive camps, in which up to 1 million ethnic Uygurs and other Muslims are reported to have been detained and subjected to enforced political re-education.
The revisions to the legal basis say government agencies at the county level and above "may establish occupational skills education and training centres, education transformation organisations and management departments to transform people influenced by extremism through education".
China has been subject to heavy criticism from rights groups and foreign governments amid reports of a punitive crackdown that has seen the detention of as many as 1 million mostly Muslim ethnic Uighurs in Xinjiang.
Amid sustained global criticism, Chinese authorities have revised legislation to allow the regional government to officially permit the use of "education and training centres" to incarcerate "people influenced by extremism".
The region's anti-extremism laws have been in force since April a year ago, and also ban Muslim men and women from growing "abnormal" beards or wearing veils in public.
Reports of mass detentions and strict surveillance of ethnic Uighurs and other Muslims in China have sparked a growing worldwide outcry, and prompted the United States to consider sanctions.
Chinese authorities deny that the internment camps exist but say petty criminals are sent to vocational "training centres".
The new regulations in Xinjiang effectively provide a legal basis for those centres. Former detainees say they were forced to denounce Islam and profess loyalty to the Communist party in what they describe as political indoctrination camps.
China says Xinjiang faces a serious threat from Islamist militants and separatists.
Urumqi, capital of the largely Muslim Chinese region of Xinjiang, will crack down on activities that blur the boundary between religion and secular life and encourage "extremism", the local government said.