Boris Johnson is to outline a new three-tiered system of coronavirus restrictions on Monday that is expected to cause pubs and restaurants to shut across the north of England.
The Prime Minister will unveil full details of the localised approach in a statement to the House of Commons, following criticism of the Government for not keeping MPs properly informed of changes.
In a letter to MPs sent on Friday, Mr Johnson's chief strategic adviser Sir Edward Lister wrote: "It is very likely that certain local areas will face further restrictions."
Tough new rules for northwest England could be implemented as early as Wednesday.
A number of possibilities were discussed during an end-of-week meeting between northern leaders and MPs, with the Government said to be considering preventing people from travelling in and out of the worst-hit areas.
Under the new rules, pubs and restaurants could be shut in parts of northern England and the Midlands – which are seeing the steepest spike in infections – while a ban on overnight stays is also being considered.
Sir Edward stated in his letter that the Prime Minister believed local leaders should “help shape the package of measures in the most concerning areas”.
Ministers will discuss “difficult choices” with local leaders, the letter stressed.
A senior Government source told the BBC that Mr Johnson had told officials that he wants much closer engagement with local leaders before further measures are finalised..
"Local people are going to have to endure these restrictions so it is only right their leaders have a say on what they are," the source told the news site, adding: "They will also bring expertise on what will work in their regions".
Nottingham now has the highest Covid-19 infection rate in England, with 760.6 cases per 100,000 people – a huge jump from 158.3 per 100,000 in the seven days to September 29.
Knowsley has the second highest rate, which has leapt from 391.1 to 657.6 per 100,000, while Liverpool is in third place, where the rate has also increased sharply, from 419 to 599.9.
Separate figures suggested coronavirus cases are doubling about twice as fast in the North West, Yorkshire and the West Midlands as for the whole of England.
It comes as Chancellor Rishi Sunak announced new support measures for UK firms forced to shut under new restrictions.
The expansion of the Job Support Scheme will see workers in pubs, restaurants and other affected businesses have two thirds of their wages paid by the Government.
Mr Sunak insisted that the new support was “very different” to furlough, which he previously declined to extend – arguing it was “fundamentally wrong” to hold people in jobs that only existed inside the scheme.
The new scheme will see the Government pay two thirds of each employee’s salary – up to a maximum of £2,100 a month – if their employer is legally required to close their premises because of restrictions.
It will launch on November 1 and last for six months.
Businesses will be able to claim the grant when they are subject to restrictions and employees are off work for at least seven consecutive days.
Venues which are already legally closed, such as nightclubs, will also be eligible.
But mayors from the north of England said the new package did not seem to go “far enough” to prevent “genuine hardship, job losses and business failure this winter”.
Greater Manchester mayor Andy Burnham, mayor of North Tyne Jamie Driscoll, mayor of Sheffield City Region Dan Jarvis and mayor of Liverpool City Region Steve Rotheram used a joint statement to warn the help may not be enough.
They said: “We are pleased that the Government has listened and recognised that any new system of restrictions must come with a substantial package of financial support.
“What has been announced by the Chancellor today is a start but, on first look, it would not appear to have gone far enough to prevent genuine hardship, job losses and business failure this winter.
“Mayors and leaders from across the north will be meeting tomorrow to discuss it in more detail and we will make a further statement then.”
Meanwhile, the Welsh government announced that new restrictions are to be introduced in Bangor this weekend following a sharp rise in cases.
From 6pm on Saturday, people will not be allowed to enter or leave the area without a “reasonable excuse” and can only meet people they do not live with outdoors.
The new measures will apply to everyone living in the eight wards that make up the city of Bangor.
It comes in response to a “significant cluster of cases” with outbreaks appearing to be “closely associated with young people and students”, according to the government.
In a statement on Friday, First Minister Mark Drakeford said: “Unfortunately, we have seen a large number of cases in Bangor, which is largely linked to people socialising.
“We have worked closely with the local authority, the police in North Wales and public health experts to assess the need for local restrictions."
In other developments, the UK recorded a further 13,864 Covid-19 infections overnight on Friday, bringing the total to 575,679 since the start of the pandemic.
Another 87 people were confirmed to have have died within 28 days of testing positive for the disease.
The country's official death toll now stands at 42,679.