Experts said low winds, holiday fireworks residue and crop-burning in neighbouring states contributed to the haze, which reduced visibility at the airport to a 17-year low last week.
Air-quality data from the US Embassy's air monitor - which measures the particulate pollutant known as PM 2.5 - averaged 640, more than six times the level deemed acceptable by the Environmental Protection Agency.
Delhi's Chief Minister, Arvind Kerjiwal, said the city would undertake emergency measures to address the "need of the hour," including banning construction activity for five days, limiting diesel-generator use, water-treating dusty roads and temporarily closing a coal-fired power plant.
The city's schools will remain shut for three days, he said.
Environmental experts applauded the move but say the city - the 11th-most-polluted in the world, according to the World Health Organisation - needs far more stringent long-term solutions.
Last week, the country's environmental court had chided both the central and state governments for "shifting blame" and not taking action to address the problem.