Both papers routinely run stories critical of local governments around China, as well as articles that defy edicts issued by the party's propaganda bureau ordering media to show Chinese society in a positive light.
Both began publishing about a decade ago and gained widespread popularity for their colourful stories and advertisements.
The move was aimed at bringing the two papers under the control of local management and reining in an advertising war between the publications, the report said. The two papers may be merged into one, it added.
The Beijing News was formerly a joint undertaking between the Guangming Daily Group and the Southern Daily Group, arguably China's most daring newspaper publisher.
The Beijing Times was run by the People's Daily Group, whose flagship People's Daily is the official Communist Party mouthpiece.
Officials and journalists at both papers refused to comment on the takeover when contacted by AFP on Sunday.
But Internet postings on the move were critical.
"Two Beijing newspapers have been downgraded, their style of daring to speak out has been seriously hampered," a user named brkchinese wrote on the microblogging site Twitter.
Aboluowang, another Twitter user, wrote: "The Beijing government has taken over the two capital publications that have dared to speak out ... it looks like the gagging of public opinion in the capital has been stepped up."
The Chinese government strictly censors the country's newspapers, broadcast media and the Internet, blocking any information it considers sensitive.Controls have been further tightened by a heavy clampdown on dissent, with a number of prominent lawyers and activists detained amid official fears that recent uprisings in the Arab world could spark similar movements in China.