Cabinet ministers have agreed to level five restrictions from midnight on Wednesday in a bid to combat the rise in cases.
Hotels, guesthouses and B&Bs may remain open, but only to support provision of essential services.
Under the new restrictions, people will have to limit movements to within a five-kilometer radius of their homes and to stay out of each other's houses.
Earlier, the government rejected the experts' call for the imposition of the most severe Level 5 restrictions.
Predicting that Covid-19 will be with us for the entire 2021, the Prime Minister said the Government can not fight the virus alone and asked everyone to take this threat seriously.
Under the rules, people will only be able to exercise within 5km (3 miles) of their home. Police will continue to use road checkpoints to deter longer and non-essential journeys.
A graduated system of penalties is being examined to enforce this.
Under Level 3, there are stricter restrictions on gatherings and people are advised to work from home unless absolutely necessary.
Making the announcement, the Taoiseach, Micheál Martin, said that people have already "sacrificed so much".
Navarra has Spain's highest infection rate with 950 cases per 100,000 people over the past fortnight - almost double that of Madrid.
COVID-19 cases in B.C., 1 death
There were 155 new COVID-19 cases in B.C.in the last 24 hours, including three in the Interior Health region. There have been no new health-care facility outbreaks and the outbreak at Kin Village has been declared over.
The country has a population of almost 5 million.
Restaurants, cafes and bars will be permitted to provide takeaway services only and only essential shops may remain open.
Social bubbles will be considered a single household so if your elderly parent living alone forms a bubble with your household, you will collectively be treated as one household.
He said it would cost around €200 million ($236 million) per week to support the economy through employment benefits and grants.
She said it would be "unthinkable" if the Dáil met again in six weeks' time without having responded to these challenges.
"So about €1.5 billion ($1.77 billion) for six weeks and that's not taking account, though, of the potential fall in [tax] revenue that may arise from business closures", Varadkar said.
Ireland is upping its pandemic unemployment checks and is asking for commercial landlords to give their tenants a break, he said.
The National Public Health Emergency Team (Nphet) and Chief Medical Officer Tony Holohan last week urged the government to bring in the Level 5 restrictions for a six week period.
However, as the daily figures show, these restrictions, on their own, have not been enough to significantly reduce the levels of infection. It's complicated, there's a huge amount of implications for people's everyday lives.