Claude Guéant said that ban could later be extended to the rest ofFrance, in particular to the Mediterranean cities of Nice and Marseilles, where "the problem persists".
He promised the new legislation would be followed to the letter as it "hurts the sensitivities of many of our fellow citizens".
"My vigilance will be unflinching for the law to be applied. Praying in the street is not dignified for religious practice and violates the principles of secularism, the minister told Le Figaro newspaper.
"All Muslim leaders are in agreement," he insisted.
In December when Marine Le Pen, then leader-in-waiting of the far-Right National Front, sparked outrage by likening the practice to the Nazi occupation of Paris in the Second World War "without the tanks or soldiers". She said it was a "political act of fundamentalists".
More than half of right-wing sympathisers in France agreed with Marine Le Pen, at least one poll suggested.
Nicolas Sarkozy's party denounced the comments, but the President called for a debate on Islam and secularism and went on to say that multiculturalism had failed in France.
Following the debate, Mr Guéant promised a countrywide ban "within months", saying the "street is for driving in, not praying".
In April, a ban on wearing the full Islamic veil came into force. Holland today became the third European country to ban the burka, after Belgium, despite the fact fewer than 100 Dutch women are thought to wear the face-covering Islamic dress.
Yesterday, Mr Guéant said the prayer problem was limited to two roads in the Goutte d'Or district of Paris's eastern 19th arrondissement, where "more than a thousand" people blocked the street every Friday.
However, a stroll through several districts in Paris on a Friday suggests that Muslims spill into the streets outside many mosques.
Under an agreement signed this week, believers will be able to use the premises of a vast nearby fire station while awaiting the construction of a bigger mosque.
"We could go as far as using force if necessary (to impose the ban), but it's a scenario I don't believe will happen, as dialogue (with local religious leaders) has born fruit," he said.
Sheikh Mohamed salah Hamza, in charge of one of the Parisian mosques which regularly overflows, said he would obey the new law, but complained: "We are not cattle" and that he was "not entirely satisfied" with the new location. He said he feared many believers would continue to prefer going to the smaller mosque.
Public funding of places of religious worship is banned under a 1905 law separating church and state. Mr Guéant said that there were 2,000 mosques in France with half being built in the past ten years.
France has Europe's largest Muslim population, with an estimated five million in total.