The People's Liberation Army is considering establishing a joint operational command to improve co-ordination between its different parts.
The Ministry of National Defence said the reform was necessary for electronic and information warfare and was a common trend around the world.
A ministry statement said that after studying the issue it would "deepen reform at an opportune time, creating a path of reform for a joint operational command system with Chinese characteristics".
The defence ministry's statement did not give a timeframe for the reform, nor specific details of the future structure. The Japanese Yomiuri newspaper reported this week that China was planning to cut the number of military area commands from seven to five.
Citing anonymous senior military officials, the report said each of the five areas would have a joint operations command for ground, naval and air forces, and the strategic missile corps.
The report said that, of the existing military regions, Jinan, Nanjing and Guangzhou would set up new joint commands to oversee the Yellow Sea, East China Sea and South China Sea within five years.
Military observers said the reform was necessary because security threats were shifting to the ocean as the nation was involved in bitter territorial disputes in the East and South China Seas. These created challenges for the current seven military regions, which traditionally focused on ground-based army units.
The different branches of the military also remained highly independent of each other, making centralised control and joint combat efforts difficult.
"The commanders may not have sufficient authority to mobilise the navy and air force," said Beijing-based military affairs commentator Yue Gang. "But nowadays, security challenges are not only ground-based, and the role of the navy and air force will be more prominent."
Yue said the reform indicated more authority would be delegated to the regional commands, while the supreme military policy-making Central Military Commission, headed by party chief Xi Jinping , would focus on setting broad strategies, including those for the use of aircraft carriers.
Discussions on military structural reform have been going on for years, but no significant progress has been made.
"It indicates Xi has consolidated authority over the military and can exercise more control, after tackling other domestic issues, such as corruption," said Ni Lexiong, director of the Sea Power and Defence Policy Research Institute at the Shanghai University of Political Science and Law. But observers said completing the reform would take a long time because it would affect the vested interests of different factions within the military.