Video report by ITV News Political Correspondent Carl Dinnen
Firms in the retail, hospitality and leisure industries - which will be closed until at the earliest mid-February - will receive a one-off cash sum worth up to £9,000 with the amount provided depending on the value of their business.
A further £594 million is also being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the grants that might be affected by the restrictions - businesses should apply to their Local Authority for the support.
It is estimated the latest raft of Treasury spending will cost £4.6 billion.
Chancellor Rishi Sunak said: “The new strain of the virus presents us all with a huge challenge - and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.
“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring.
“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”
Sunak outlines what support is being provided:
The Treasury said the one-off grants will be linked to business rates, with payments of £4,000 for businesses with a rateable value of £15,000 or less, £6,000 for businesses with a rateable value of between £15,000 and £51,000, and £9,000 for businesses with a rateable value of more than £51,000.
The cash comes on top of to billions of existing business support, including grants worth up to £3,000 for closed businesses, and up to £2,100 per month for impacted businesses once they reopen.
The government has already provided £1.1 billion of discretionary funding for local authorities, extended the furlough scheme until April and taxpayer-backed business loans until March.
When asked whether he would be prepared to extend furlough for as long as it takes, Mr Sunak said the budget in March "is an excellent opportunity to take stock of the range of support that we've put in place and to set out the next stage of our economic response to coronavirus".
Greater Manchester Mayor Andy Burnham, who has been a vocal critical of the level of government support throughout the pandemic, welcomed the cash but questioned why Mr Sunak had not chosen to support more people
He said the chancellor's proposals were "good as far as it goes, but no mention of people excluded from public support".
"Does the Government really have no intention of bringing 3 million taxpayers in from the cold? If not, Parliament should call a vote on this tomorrow," he tweeted.
Cabinet Office Minister Michael Gove said the government would "do everything" it can to help, but admitted the situation is "uniquely difficult" for many.
He told ITV News: "We constantly keep under review what we can do to support people but I won't disguise from anyone the fact this is a uniquely difficult time and while we will do everything that we can, it's difficult."
With all schools forced to close under the lockdown, some working parents have voiced concern about a lack of support to help with the additional cost of childcare.
Mr Gove, when asked about the issue, said the government is "doing everything it can" to ensure childcare is available to parents who need it.
Michael Gove: The situation is 'difficult'...
The chancellor announced the support after Prime Minister Boris Johnson put England into a new national lockdown, with case rates of coronavirus rising rapidly across the country.
The new lockdown will see England, in effect, return to the restrictions of the first lockdown in March - with people only allowed to leave their house for essential reasons and the majority of schools closed.
All non-essential retail, hospitality and personal care businesses must close.
Restaurants can offer takeaways and deliveries but are not allowed to serve alcohol.
Watch Boris Johnson's lockdown announcement in full:
The restrictions are expected to last until at least February 15, but on Tuesday morning, Cabinet minister Michael Gove suggested they could be in place until March with a gradual easing then following as more and more people are vaccinated against coronavirus.
But two new variants of the virus are causing serious concern among experts and ministers, with it not yet clear whether vaccines will have an effective impact on them.
One of the new strains, which was first identified in the UK and is thought to spread around 70% more quickly than the original, is fuelling a new surge of infections across the UK.
The other variant, which is thought to have originated in South Africa, is believed to be even more fast spreading, however it is currently much less prevalent in the UK.