Video report by ITV News Economics Editor Joel Hills
It means those returning from the country, including the Balearic Islands and Canary Islands, will have to self-isolate for two weeks upon their return to the UK.
Here's what some of the major airlines and travel firms are offering their customers.
Holiday operator Tui has suspended its cancellation of package holidays to mainland Spain until August 17.
Following the FCO's update - advising against all travel to Spain, including the islands - Tui has cancelled all holidays to the Spanish islands from July 28 until August 10.
The company said customers affected "will be able to cancel or amend their holiday and will be able to receive a full refund or the option to rebook their holiday with a booking incentive"
It added: "All customers currently on holiday can continue to enjoy their holiday and will return on their intended flight home."
The firm said it is adding more flights to Greece and Turkey "following the overwhelming demand from customers to still get away this summer".
Andrew Flintham, managing director of TUI UK and Ireland, outlines what's in place for their customers:
The tour operator has said it will increase flights to Greece and Turkey in the first weekend of August to enable more affected customers to switch their destinations.
Following the update advice from the government on travel to the Spanish islands, Jet2 has suspended flights and holidays to Tenerife, Gran Canaria, Fuerteventura, Lanzarote, Majorca, Menorca and Ibiza up to and including August 9.
The airline had already suspended flights and holidays mainland Spain, Costa de Almeria, Alicante, Malaga and Murcia from July 28 up to and including August 16.
Customers with bookings to these locations can rebook with no admin fee or opt for a refund as a credit note or in cash. The airline says it will contact customers to discuss these options.
"For customers who are due to travel to these destinations after the dates given above, we will provide an additional update once we receive more information from the Government," the airline said.
A spokesperson added: "We will also contact customers who are currently in mainland Spain to advise them of their options regarding flying back to the UK, so we urge customers not to contact us."
For those with bookings for mainland Spain from 17 August onwards, Jet2 says it will provide an update "once we receive further information from the government."
The airline has said it will contact customers currently in the affected destinations to "advise them of their options regarding flying back to the UK."
The airline has said it will continue to fly to Spain - despite the Foreign and Commonwealth Office (FCO) warning and quarantine rules.
British Airways customers are able to claim a voucher for future travel if they no longer wish to fly to or from Spain.
Customers wishing to change their booking will need to contact the airline.
EasyJet has said it plans to operate its full schedule in the coming days but customers can transfer their flight without a change fee or receive a voucher for the value of the booking.
A spokesperson added: "Should any flights be cancelled for later in August customers will be notified and informed of their options which includes transferring to an alternative flight free of charge, receiving a voucher or applying for a refund."
The firm has announced all of its Spain holidays are cancelled until August 1.
The company is likely to continue flying.
If your flight isn’t cancelled, the airline is continuing to waive it flights change fee for all customers who book to travel in September.
Flights booked for July and August are already free of any change fees.
For customers with flights to Spain, they will be free to change the flight without paying a fee until December 31.
The Spanish low-cost airline told ITV News: "Our operations from/to the UK are developing normally, and Vueling is duly informing all customers about the regulations implemented in all countries we operate to."
It added: "Vueling is in permanent contact with both the health and aviation authorities and closely monitoring all developments regarding COVID-19 in Europe, to be able to implement all official requirements and recommendations."
The airline says it is offering "special flexibility conditions" including allowing date changes without a fee.
What other advice is there for holidaymakers?
ABTA, the UK's trade association for tour operators and travel agents, has recommended holidaymakers due to depart for a package holiday to mainland Spain speak to their tour operator.
Sean Tipton, a spokesperson for the group, told ITV News if travellers have "booked their own arrangements, it's not quite so simple".
He stressed it is "slightly different" for holidaymakers travelling to the Spanish islands rather than mainland.
"You can go [to the islands], there's nothing to stop you going. The Foreign Office is not saying 'don't go' it's just the requirement to self-isolate when you get back."
The Association of British Insurers (ABI) said it is “likely” that travel insurance will remain in place for holidaymakers already in Spain until they return home.
But The ABI warned that those attempting to travel to countries against FCO advice would invalidate their travel insurance.
People who booked a trip or took out travel insurance after Covid-19 was declared a pandemic may not be covered for travel disruption or cancellation, it said, and advised travellers to check with their insurer.
Katie Morley, consumer rights expert at The Telegraph has more tips for travellers: