Taoiseach Micheal Martin said the Government was acting “quickly and aggressively” to try to suppress the soaring case numbers.
Ireland is returning to the highest level of its Covid-19 response – Level 5 – with some adjustments, such as allowing shops to remain open.
The measures will initially remain in place until January 12.
Mr Martin said it was responsible to proceed on the assumption that the new variant of Covid-19 was already in Ireland.
The restrictions will mean:
Restaurants and gastro pubs will have to close at 3pm on December 24.
Inter-county travel will be prohibited after December 26. However, people who are away from their place of residence after that date will be allowed to return home.
From January 1, no gatherings among households in private homes and gardens will be permitted.
Experts on Ireland’s National Public Health Emergency Team (Nphet) have warned that Ireland is in the midst of a third wave of the pandemic.
Case numbers have soared by more than 70% in the last week.
The Nphet had urged the introduction of Level 5 measures.
In a televised address to the nation, Mr Martin said: “The one thing which remains absolutely consistent about this virus is that it is potentially deadly and if it is left to spread unchecked it will reach the most vulnerable and they will pay a heavy price.”
The Taoiseach added: "Unfortunately, in the last week we have seen extraordinary growth in the spread of the virus.
"This is the same pattern that we have seen in the United Kingdom and across Europe.
"Just this morning figures suggest that we may now be seeing a daily growth rate of approximately 10%.
"This is very obviously a source of serious concern. It is simply not sustainable.
"While we do not yet have firm evidence that the new more virulent strain of the Covid virus is in our country, the rate of growth over the last week tells me that the safest and most responsible thing to do is to proceed on the assumption that it is already here."
The current measures that allow visits from two other households to a private dwelling or garden will end on December 27.
One other household will be allowed to visit up to December 31 before the ban on visitors, apart for essential purposes, will come into effect.
Mr Martin said social bubbles would continue to be regarded as one household in respect of the restrictions on gatherings in homes and gardens.
What will stay open under the new restrictions?
The adjustments from full Level 5 include non-essential retail being able to remain open, with guidance that shops do not run January sales.
Gyms, leisure centres and swimming pools could remain open for individual exercise.
Schools will also stay open but higher, further and adult education should remain online.
No sports matches can take place apart from those at elite level.
After 3pm on Christmas Eve, hotels will only be able to remain open for essential and non-tourism purposes.
Christmas religious services will be allowed to take place but after December 25 services should return to an online format. Places of worship will remain open for private prayer.
Mr Martin added: “I know that these restrictions will pose huge challenges for some sectors of the economy but I want to reassure them that extra financial supports will be provided.”
The Fianna Fail leader said the approval of the first vaccine for use in Ireland had offered hope.
"As despondent as any of us might feel with the return of restrictions, it is important to remember that the hope is real, there is light at the end of this tunnel," he said.
"Vaccines are on the way, last night I received confirmation that we will shortly receive delivery of almost 10,000 vaccines against this disease.
"The rollout of these will commence next week to our most vulnerable and we will safely and swiftly build from there."