Video report by ITV News Correspondent Stacey Foster
The local lockdown in the area will be partially relaxed, Mr Hancock told MPs, including for schools and early years childcare.
In a statement, he told the Commons Covid-19 rates in the city "still remain well above the national average and the average for surrounding areas".
The health secretary also revealed an issue with some Covid-19 test kits across England.
Many were hoping for a full lifting of the restrictions, ITV News Correspondent Stacey Foster explains
Mr Hancock said use of Randox swab test kits would be "paused" across all settings as they "are not up to the usual high standard that we expect".
Pressed on the issue by shadow health secretary Jon Ashworth, Mr Hancock revealed:
"The reason is that they had a CE stamp and upon investigation of the certification of that stamp the certification was not forthcoming, and therefore physical checks were done and we found that the swabs weren't up to the standards that we expect."
Mr Hancock added there had been "no evidence of any harm" as a result of the issue and said test results had not been impacted.
Outlining the changes to Leicester's lockdown the health secretary told MPs: "We’re now in a position to relax some but not all of the restrictions that were in place.
"From July 24 we’ll be removing the restrictions on schools and early years childcare and taking a more targeted approach to the restrictions on non-essential retail."
He told the Commons: "Some say that the local lockdown is unnecessary. I wish this were true, but sadly it remains vital for the health of everyone in Leicester and the rest of the country that these restrictions stay in place."
Mr Hancock continued: "Restrictions like those for travel and only having social gatherings of up to six people, for example, will remain in force.
"And measures introduced on July 4 like reopening the hospitality sector will also not yet apply."
On the latest infection rates in the area, the health secretary said:
"The seven-day infection rate in Leicester is now 119 cases per 100,000 people and the percentage of people testing positive is now at 4.8%."
He said these are "positive indicators, especially in light of the huge increase in testing."
Mr Hancock compared the figures to when the local lockdown was imposed, then the seven-day infection rate was 135 and 10% of tests were positive.
He thanked the people of Leicester and Leicestershire for their "perseverance and hard work" and committed to continuing to review the measures every fortnight.
Mr Ashworth, who is MP for Leicester South, told the Commons:
"If we still have to make further personal sacrifice to keep people safe and hunt this virus down with the lockdown, then so be it."
But added there would be "a degree of dismay across the city" in response to Mr Hancock's remark.
The Labour frontbencher said many businesses would want to know if they can get extra support if they cannot reopen.
Mr Ashworth also pressed the health secretary on comments from the government's chief scientific adviser Sir Patrick Vallance - who has said the government was advised to implement lockdown measures earlier than it did.
Mr Ashworth asked: "Why did it take a further seven days for the government to implement lockdown if Sage was advising March 16?"
The health secretary replied: "Of course 16 March is the day when I came to this House and said that all unnecessary social contact should cease."
He claimed: "That is precisely when the lockdown was started".
In an address to the nation on March 23, Boris Johnson announced a three week lockdown to limit the spread of coronavirus.