Video report by ITV News Political Correspondent Carl Dinnen
The PM held a press conference to announce the changes in Greater Manchester, just minutes after the region's Mayor Andy Burnham held his own press conference, revealing the government had walked away from financial support talks on Tier 3 restrictions.
From Friday morning all hospitality venues in Greater Manchester - except those serving food - will close for 28 days, as well as all betting shops, casinos, bingo halls, adult gaming centres, and soft play areas.
People are also "strongly" advised against traveling into and out of the area.
Mr Burnham said political leaders in the region had estimated that £65 million was the "bare minimum" needed to get to the end of the financial year, however the government "refused to accept this".
The prime minister said Greater Manchester will receive £22 million to help local authorities implement and enforce restrictions but it is not clear what additional support there will be for businesses and workers impacted by the measures.
Local leaders initially wanted £90 million in financial support for businesses and staff in Greater Manchester, but they reduced their demand to £75 million, and then further to £65 million, but the government refused to budge past £60 million, according to Mr Burnham.
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Labour leader Sir Keir Starmer has said the party will force a Commons vote on Wednesday demanding a "fair one nation deal" for areas facing Tier 3 restrictions.
The party said it will urge its MPs to back its motion demanding "the Government guarantees people faced with hardship who are subject to the Job Retention Scheme extension will receive at least 80% of their previous incomes".
However, Health Secretary Matt Hancock said that the offer of more cash is "still on the table".
Live: Health Secretary Matt Hancock gives Covid update in House of Commons
Mr Hancock said daily hospital admissions in Greater Manchester are higher now than they were at the end of March.
He said: "So we must act where the virus is spreading. In the parts of the country where it is spreading the fastest it is our sombre duty to take action necessary to protect people’s lives and protect the NHS."
Mr Hancock added: "It has been clear for some days now that further action is needed across parts of England."
He continued: "In Greater Manchester there have been more coronavirus infections already in October than in July, August and September combined.
"The average daily hospital admissions in Greater Manchester are now higher than they were on March 26 and there are now more Covid-19 patients in Greater Manchester hospitals than in the whole of the South West and the South East combined."
Earlier on Tuesday, the Mayor of Greater Manchester said: "That is what we believe we needed to prevent poverty, to prevent hardship, to prevent homelessness.
"Those were the figures that we had - not what we wanted - but what we needed to prevent all of those things from happening.
"But the Government refused to accept this and at 2pm today they walked away from negotiations."
Mr Johnson claimed the offer of financial support to Greater Manchester was "generous and extensive" but Mr Burnham said "at no point today" was his region "offered enough to protect the poorest people in our communities through the punishing reality of the winter to come".
The PM said the offer was "proportionate" to the support given to Merseyside and Lancashire, "but the Mayor didn’t accept this unfortunately".
"I do regret this," the PM said, "we would have a better chance of defeating the virus if we work together".
Mr Johnson said he was forced to "take action because of the urgency of the situation".
"Not to act would put Manchester’s NHS, and the lives of many of Manchester’s residents, at risk," he said.
When asked to clarify whether Greater Manchester will be getting the funding it asked for, the Mr Johnson said the deal had to be in line with Lancashire and Merseyside "for the sake of fairness".
He said: "Obviously we want to do more, but for the sake of fairness the deal has to be in line with the agreements we reached with Lancashire and Merseyside, where we have made progress."
Mayor Burnham said he is "still willing to do a deal" but it "cannot be on the terms that the Government offered today".
He added: "I don't think it is right to ask people to go into a lockdown, to accept further changes within their lives, without supporting them through all of that.
Covid tiers: - What are the differences between each alert level?
Medium (Tier 1) - Rule of six applies indoors and outdoors. Pubs and restaurants close at 10pm.
High (Tier 2) - Households must not mix indoors in any setting including pubs and restaurants. Rule of six applies outdoors
Very high (Tier 3) - Households must not mix indoors, or in private gardens. Rule of six applies in outdoor spaces including parks. Pubs and bars which don't serve meals will be closed
"How can we carry the public with us through this pandemic if we are forcing them to lose their income, their place of work, without supporting them through that?"
He called on Parliament to "intervene and make a judgement" on a fair financial framework for tier 3 lockdowns , adding how every part of the country should be concerned by the lack of support offered to areas put under tightened restrictions.
Mr Johnson also said discussions on moving South Yorkshire, West Yorkshire, Nottinghamshire and the parts of the North East into Tier 3 continue with local leaders.