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Beijing was one of 24 cities across northern China to issue a smog "red alerts" in the past week, triggering emergency measures to close factories and restrict traffic.
The heavy pollution in Beijing cleared on Thursday, but it could return, with energy demand - much of which is met by coal - to remain high throughout the winter heating season.
Dongcheng, a core urban district of Beijing, plans to cut its permanent residents to 762,000 by 2020, down 115,000 from the 2016 target, while Xicheng district is targeting a cap of 1.1 million within five years, the newspaper said.
Daxing and Shunyi, two new municipal districts, are targeting a population below 1.7 million and 1.3 million respectively. Shijingshan, a relatively small district in area, aims for 616,000 next year, almost unchanged, it said.
The official Beijing News said plans to relocate residents, companies and some government departments to suburban areas or even outside the capital, together with the demolition of illegal buildings, are expected to play a major part in the scheme to cap population.
Beijing, home to around 22 million people, has pledged to resolve what policymakers in China describe as "Big City Syndrome", where rapid and imbalanced growth has created a congested, polluted and chaotic industrial megapolis with soaring living costs and strained public services.
The city government toyed with the idea of cutting the total population by 5 million people a few years back, but abandoned the idea in their 2016-2020 five year plan. It still pledged to keep population below 23 million by 2020.
The capital's population has risen by around two-thirds since 1998, while energy consumption has more than doubled and the number of vehicles on its roads tripled over the period. Beijing's rapid growth has also sapped the economies of neighbouring regions, including Hebei province.