England's national lockdown will end next month, Boris Johnson announced.
The UK Prime Minister said all shops and gyms could reopen from December 2 but the tier system in place before lockdown would be strengthened.
In a surprise move, spectators will be allowed to return to sporting events in low-risk areas but not in tier three areas.
Mr Johnson also said the government hoped for families to be together at Christmas.
He told MPs: “In a period of adversity, time with our loved ones is even more precious for people of all faiths.
"We all want some kind of Christmas. We all need and we feel like we deserve it. But what we don’t want is to throw caution to the winds and allow the virus to flare up again forcing us to go back into lockdown in January."
In a subsequent press conference, Mr Johnson said he was working with the Scottish, Welsh and Northern Irish executives on nationwide plans to briefly relax the rules at Christmas to allow families to get together, and details would be announced shortly.
He urged the public to keep following the rules in the run-up to the festive season to make such a short respite possible.
He said: "This is not the moment to let the virus rip for the sake of Christmas parties.
"'Tis the season to be jolly, but 'tis also the season to be jolly careful, especially with elderly relatives."
England's Chief Medical Officer Chris Whitty, speaking at the same news conference, said the expected loosening of social distancing rules would create risks, and that people should behave responsibly before, during and after Christmas.
"It is pretty obvious, I think to anybody, that the Christmas holiday period, the loosenings around that ... that's going to come at a risk," he said.
Addressing the strengthened tier system, the Prime Minister said hospitality in tier three areas would be forced to close except for deliveries and takeaways.
In tier two, pubs can serve alcohol only if it comes with a meal.
People in tier one areas will be advised to continue working from home wherever possible.
Where pubs are allowed to open, last orders will now be at 10pm, with customers allowed an extra hour to finish their drinks.
Declaring it won’t be a “free for all”, Mr Johnson said many regions would emerge from lockdown and straight into tier three restrictions.
The allocation of tiers will be dependent on several factors, including each area's case numbers, reproduction rate – or R number – and the present and projected pressure on the local NHS.
Tier allocations will be reviewed every 14 days, and the regional approach will last until March.
The government will announce on Thursday what level of restrictions people face.
Mr Johnson said the UK was still under threat from a winter surge of the virus.
“The incidence of the disease is still widespread in many areas,” Mr Johnson said.
He also said:
- Rapid testing would be expanded after a successful Liverpool trial
- The 14-day self-isolation for close contacts of an infected person would be scrapped
- People could be allowed to visit elderly relatives thanks to rapid testing