The government said ministers would meet to activate Article 155 of the constitution, allowing it to take over running of the region.
Catalonia's leader said the region's parliament would vote on independence if Spain continued "repression".
Catalans voted to secede in a referendum outlawed by Spain.
Some fear the latest moves could spark further unrest after mass demonstrations before and since the ballot on 1 October.
Spain's supreme court declared the vote illegal and said it violated the constitution, which describes the country as indivisible.
Article 155 of the constitution, which cemented democratic rule three years after the death of dictator General Francisco Franco in 1975, allows Madrid to impose direct rule in a crisis but it has never been invoked.
Madrid correspondent Tom Burridge says that for Madrid this is about upholding the rule of law in Catalonia, protecting the Spanish constitution and disciplining what it sees as an unruly, disobedient devolved government.
However, the central government wants to minimise the risk of large-scale demonstrations, our correspondent says. Civil servants and government lawyers have thought long and hard about what measures to adopt and when and how they should be implemented.
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Political rhetoric aside, both the Spanish government and Catalan regional leaders know sentiments are running so high across Spain at the moment, that millions are poised to take to the streets.
Once the shopping list of measures has been decided, the Catalan leader has the right of reply and we're told there is no legal window of opportunity for him to do so, meaning this could take days or weeks.
Finally, the Spanish Senate needs to approve the measures.
What is Madrid's position?
Spanish Prime Minister Mariano Rajoy had set a deadline of 10:00 local time (08:00 GMT) for Catalan leader Carles Puigdemont to offer a definitive answer on the independence question, and called on him to "act sensibly".
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When it passed, the Spanish government accused the Catalan authorities of seeking confrontation.
"The Spanish government will continue with the procedures outlined in Article 155 of the Constitution to restore legality in Catalonia's self-government," it said.
"It denounces the attitude maintained by those in charge of the Generalitat [Catalan government] to seek, deliberately and systematically, institutional confrontation despite the serious damage that is being caused to the coexistence and the economic structure of Catalonia.
"No-one doubts that the Spanish government will do all it can to restore the constitutional order."
What happens now?
Mr Rajoy is due to attend an EU summit in Brussels on Thursday afternoon.
On Saturday the government will be expected to draw up a list of specific measures under Article 155 of the constitution, launching the transfer of powers from Catalonia to Madrid.
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