The move answers questions about whether the authoritarian government, which strictly limits public dissent, would allow any protests during the games.
However, demonstrators will have to obtain permits from local police and follow Chinese laws that restrict protests on many political issues. It's unclear whether protesters will be able to obtain permits to demonstrate on controversial issues such as Darfur and Tibet.
"The police will safeguard the right to demonstrate as long as protesters have obtained prior approval and are in accordance with the law," Liu Shaowu, director of security for Beijing's Olympics Organizing Committee, told a news conference, according to the New York Times.
Olympic officials set up similar protest zones during previous games in Athens and Salt Lake City.
However, in China protesters must apply to a local police bureau five days in advance of a protest, and give detailed information about the demonstration. They are not allowed to protest on issues "deemed harmful to national unity and social stability," according to the Times -- a provision that may mean few protests are approved.
"We never get it no matter how many times we try," legal rights advocate Jiang Tianyong told the paper. "This is only a show for foreigners."
Nicholas Bequelin, a spokesman for Human Rights Watch, also decried the restrictions: "The obstacles and deterrents are so high as to negate the right to demonstrate," he told the Guardian newspaper. "We are also concerned about the possibility that the authorities might use the existence of these zones to justify repressive measures against demonstrators outside of the zones."
In recent weeks, as the games approach, human rights groups have complained of a Chinese crackdown on dissidents.
The family of one dissident, Ye Guozhu, who organized protests after he was evicted from his restaurant to make way for the construction of Olympic buildings, said he was due to be released from prison this week after serving a four-year sentence but was instead taken away by police.
"We believe the police took him away to silence him during the games," his brother Ye Guoqiang said via the Chinese Human Rights Defenders Network, according to the Guardian.
The three protest zones will not be located near the Olympic Green where most of the events will take place, but instead are in outlying parks, the Associated Press reported.
Liu said that the Olympic charter prohibits protests at venues, to minimize disruption to the events.
"During the Games times, we must secure a good flow of traffic, a good environment and good social order," he said, according to the New York Times.