Egypt and Bahrain have been added to the UK's travel red list, with no new countries added to the green list.
Portugal was downgraded to the amber list in a blow to holidaymakers and travel firms.
Transport Secretary Grant Shapps said ministers had acted because of a rising positivity rate in Portugal and concerns over a new mutation of Covid-19.
He linked the travel update to the UK government's hopes of removing the last remaining restrictions on social contact on June 21.
"There's a sort of Nepal mutation of the so-called Indian variant which has been detected and we just don't know the potential for that to be a vaccine-defeating mutation," he said.
Afghanistan, Costa Rica, Sri Lanka, Sudan, and Trinidad & Tobago were the other countries added to the red list.
The government said it was introducing a trial in which people could fly direct from red list countries previously subject to flight bans. They would arrive at dedicated terminals at London Heathrow and Birmingham airports.
Hopes that popular destinations such as Spain and France would be added to the green list were dashed in a setback for travel companies who had called for it to be expanded.
The new rules come into effect at 4am on Tuesday, June 8.
Johan Lundgren, the CEO of easyJet, said the move to downgrade Portugal was not justified.
"This shock decision to add Portugal to the amber list is a huge blow to those who are currently in Portugal and those who have booked to be reunited with loved ones, or take a well-deserved break this summer," he said.
Stewart Wingate, the chief executive of Gatwick Airport, said the update was "bitterly disappointing news".
Travel companies including British Airways owner IAG fell on the stock market after reports emerged that Portugal would be downgraded.
Portugal was the only major holiday destination among the 12 countries included on the list of safe locations last month.
Saying that the UK would look to resume foreign holidays "given time", Mr Shapps said Europe was about 10 weeks behind in its vaccination programme.
UK Prime Minister Boris Johnson had said on Wednesday that the UK would downgrade countries to the amber or red lists if necessary.
“We will have no hesitation in moving countries from the green list to the amber list to the red list, if we have to do so,” Mr Johnson said.
“The priority is to continue the vaccine rollout, to protect the people of this country.”
Under the traffic-light system, people travelling to England from red-list countries – including those with links to Covid-19 variants such as Brazil, India and South Africa – have to quarantine in government-approved hotels.
Travellers returning from countries on the amber list, which covers most of the world, must isolate for 10 days at home and take Covid-19 tests on the second and eighth days.
Only the handful of countries on the green list can be visited without facing quarantine on returning to England.
The travel industry wants Britain's green list to be expanded as it seeks to recover from the disastrous economic effects of the pandemic.
IAG's former director of strategy, Robert Boyle, had suggested that some Spanish and Greek islands could be put on the green list.
But UK Health Secretary Matt Hancock said on Thursday that the restrictions were needed to preserve the success of the vaccine programme in Britain.
"We have seen hospitalisations and deaths come right down and we have got to protect the progress we have made here at home, whilst allowing for travel where it is safe," he said.
Travel to amber and red countries is not illegal but it is discouraged and many countries on those lists are not open to British tourists for holidays.
The EU updated its own list of safe countries on Thursday, adding Japan but not the UK or US.
The European Council agreed last month that entry restrictions should be eased for vaccinated people from outside the bloc, although individual countries have the final say.