Addressing the nation on Sunday, Netanyahu promised that the restrictions would be accompanied by a new economic aid package, which the government is to announce on Thursday.
The restrictions are to take effect on the eve of the Jewish New Year, and the stringent restrictions will continue throughout a three-week season of major Jewish holidays, to the outrage of many ultra-Orthodox.
"Our goal is to stop the increase [in cases] and lower morbidity", Mr Netanyahu said in a televised address.
It is now seeing more than 4,000 daily cases of the virus.
The anti-coronavirus measures will restrict gatherings to no more than 10 people indoors and 20 outdoors.
Some businesspeople still trying to recover from the first lockdown in the spring say they'll be forced to close unless the government offers immediate and substantial relief. In addition, he said, "If we obey the rules, we will definitely be able to conquer the corona".
Oxford's coronavirus vaccine AstraZeneca resumes trial after clearance from United Kingdom health regulator
The human trials resumed days after a pause had been announced in the trials after an adverse reaction in one of the participants. The search for vaccine has further brought together the Swedish-British biopharma major AstraZeneca and the University of Oxford.
Schools and shopping malls will be closed but supermarkets and pharmacies will remain open.
"I know these measures will exact a heavy price from all of us", Netanyahu said.
The Finance Ministry said the lockdown will cost the economy, which slipped into a recession in the wake of the virus, an estimated 6.5 billion shekels ($1.88 billion).
"It is an injustice and disregard for hundreds of thousands of citizens, ultra-Orthodox, religious and traditional", who would seek to pray in synagogues and have family meals, Litzman said.
India leads the way in new daily cases with a record 97,570 cases reported in a single day last week. There are now more than 150,000 confirmed cases and over 1,000 deceased in Israel, which has a population of about 9 million people.
In remarks to the cabinet as it convened to vote on the lockdown, Netanyahu voiced regret at Litzman's move but added: "We have to move on, to make the decisions necessary for Israel in the coronavirus era, and that is what we will do in this session".