Separate households have been banned from meeting each other indoors in Greater Manchester, east Lancashire and parts of West Yorkshire following a spike in coronavirus cases.
The health secretary said the increase in transmission was "largely due" to people not observing social distancing.
More than four million people will be affected by the tighter restrictions.
Labour criticised the government for a lack of clarity over the measures and for announcing them "late at night".
More details were published two hours after the initial announcement.
The government acknowledged the measures would "come as a blow" to Muslim communities preparing to celebrate Eid this weekend, although places of worship remain open subject to social distancing rules.
The new local lockdown rules, which came into force at midnight, come nearly four weeks after restrictions were eased across England, allowing people to meet indoors for the first time since late March.
The government published further guidance on the changes on Friday morning.
The measures mean different households will not be allowed to meet in homes or private gardens. Individual households will still be able to go to pubs and restaurants but not mix with another household.
Matt Hancock, the health secretary, also said the same restrictions would apply in Leicester, where a local lockdown has been in place for the last month.
However, pubs, restaurants and other facilities will be allowed to reopen in the city from Monday, as some of the stricter measures are lifted.Mr Hancock, who tweeted the announcement at 21:16 BST on Thursday, said: "The spread is largely due to households meeting and not abiding to social distancing. So from midnight tonight, people from different households will not be allowed to meet each other indoors in these areas.
"We take this action with a heavy heart, but we can see increasing rates of Covid across Europe and are determined to do whatever is necessary to keep people safe."
The government said it would give police forces and councils powers to enforce the new rules - adding some exemptions would be put in place, including for the vulnerable.
Labour leader Sir Keir Starmer welcomed the move but criticised the way it was handled, saying announcing measures "affecting potentially millions of people late at night on Twitter is a new low for the government's communications during this crisis".
He added: "When the government ended the daily press conferences, they said they would hold them for 'significant announcements', including local lockdowns. It's hard to imagine what could be more significant than this."
The latest announcement in detail:
- People in Greater Manchester, Blackburn with Darwen, Burnley, Hyndburn, Pendle, Rossendale, Bradford, Calderdale, Kirklees and Leicester cannot mix with other households (apart from those in their support bubbles) in private homes or gardens
- People in those areas can only go to pubs, restaurants and other hospitality venues with other members of their household
- From Monday in Leicester, restaurants, cafes, bars and hairdressers can open but leisure centres, gyms and pools will remain closed
- Cinemas and museums will also be able to open in Leicester from Monday and religious ceremonies will be able to take place
- The borough of Oadby and Wigston on the outskirts of Leicester is taken out of local lockdown
- Also, gyms and leisure centres will remain closed in Blackburn, but they will be able to reopen in Luton - both towns saw the lifting of restrictions paused last week
The government always warned it would slam on the brakes if it had to.
Now it has - on an unprecedented scale, with two-and-a-half hours notice.
Liberties recently returned, almost instantly snatched away.
And snatched with a rebuke from the health secretary for England - Matt Hancock - who repeatedly said this was necessary because some in the areas affected had failed to stick to social distancing rules.
I'm told the change comes without a time limit, but will be reviewed every week.
And don't be surprised if the government, from the prime minister down, make the case that this could happen elsewhere too if people are cavalier about the rules.
And yet, in Leicester, the local, more severe restrictions imposed there are to be eased. The baby steps back towards normality are going to be hesitant and faltering; messy in their detail and messy in their geography.
The virus has robbed us of many things.
It continues to rob us of any certainty.
Andy Burnham, the mayor of Greater Manchester - an area with a population of about 2.8 million - said he agreed with the decision as there had been a "marked change in the picture" with regard to the spread of Covid-19 in the area.
"We have gone from a falling rate of cases in nearly all of our boroughs last week to a rising rate in nine out of 10 affecting communities across a much wider geography," he said. "In Rochdale, the one borough where cases have fallen, they are still too high."
He said all residents "young and old alike" should "protect each other" by observing the requirements, which will be reviewed weekly.
This means "the more we stick to them, the quicker they will be removed", he said.
Some local Conservative MPs questioned the government's decision to apply the measures to the whole of Greater Manchester, which includes 10 local authority areas - Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan.
William Wragg, MP for Hazel Grove in Stockport, tweeted that Greater Manchester was "not one homogeneous area" and treating all 10 boroughs the same was "not the right approach".
His view was supported by Graham Brady, MP for Altrincham and Sale West, who added that the "latest update for Trafford says 'infections continue to be at a low level'".
In Trafford, latest figures show the seven-day infection rate of Covid-19 was 38 cases per 100,000 people in the week ending 26 July. The average in England was five.
Jonathan Reynolds, shadow secretary for work and pensions and an MP in the Greater Manchester area, said the figures were showing an increase in infections including in Tameside where positive tests per 100,000 population has gone from 4.9 to 16.3.
Leicester introduced a strict local lockdown at the beginning of July because the city's seven-day infection rate had risen to 135 cases per 100,000 people. It has since fallen to 58 and the lockdown was lifted for some suburbs of the city.
Blackburn and Darwen had the highest seven-day infection rate out of the 19 local authority areas affected by the new announcement, with 91 cases per 100,000.
The current rules for the rest of England allow two households - up to a maximum of 30 people - to meet indoors.
In Wales, indoor meetings between different households are still not allowed, but two households of any size can join up in an "extended household".
In Northern Ireland, groups of up to 10 people from four different households can meet indoors, while in Scotland, up to eight people from three different households can meet indoors.
Scotland's First Minister Nicola Sturgeon said the decision to ban households in parts of northern England from meeting indoors was the "right" one, adding: "This is a sharp reminder that the threat of this virus is still very real."
Miqdaad Versi, from the Muslim Council of Britain, said the restrictions were likely to have a "large impact" on Muslim families celebrating Eid.
"Unclear why such short notice provided but important that this message is cascaded as quickly as possible," he tweeted.
On Thursday, a further 38 people in the UK died, bringing the total number of Covid-19 associated deaths to 45,999.
And 846 cases were reported - the highest number of cases in a day for a month.
In other developments:
- The rules on how many people can meet outdoors in Wales will be eased from Monday, allowing groups of up to 30 to meet
- Passengers arriving in the UK from Luxembourg from Friday will have to isolate for 14 days after the country was taken off the quarantine-free list
- Official analysis shows the UK saw some of the biggest rises in deaths rates in Europe in the months until the middle of June
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