It is the first time the Prime Minister has imposed a nationwide lockdown measure since restrictions began to be eased in May and reflects growing alarm in Government at the sharp rise in infections (see graphic below), which was followed on Tuesday by a jump in daily deaths.
Mr Johnson will hold his first Downing Street press conference since July to say: "We need to act now to stop the virus spreading".
From Monday, anyone breaking the six-person rule will be liable to a £100 on-the-spot fine, which will double on repeat offences up to £3,200.
The limit of six people from up to six households will apply to adults and children indoors and outdoors, in homes, gardens, parks and venues such as pubs and restaurants.
The current "two household" rule, which has allowed up to 30 people from two different homes to meet up, will be scrapped so that all family and social gatherings of more than six people will be illegal.
It will mean a family of five will only be allowed to meet one grandparent at a time, while families of six or more will be banned from meeting anyone at all.
There will be a limited number of exemptions including weddings, funerals, Covid-secure team sports, schools, workplaces and households or "support bubbles" that have more than six people in them.
The Telegraph has learned that ministers are also considering imposing a national "curfew" after hospitality venues in Bolton were ordered to close between 10pm and 5am (watch Matt Hancock announce the measures in the video below).
The Greater Manchester town now has the highest rate of infections in the country, which has been traced back to young people mixing in pubs and restaurants and apparently ignoring social distancing rules.
The Cabinet was told by England's chief medical officer, Profesor Chris Whitty, and the chief scientific adviser, Sir Patrick Vallance, that infection rates were rising, particularly among 17 to 29-year-olds.
Ministers fear Britain is now only weeks behind other European countries that are experiencing a second wave after easing lockdowns.
Another 2,420 people tested positive on Tuesday following a doubling of cases over the weekend (use the graphic below to find the cases in your area), and 30 people died – the highest number since early July and almost three times the current daily average.
With universities preparing to welcome students for freshers week, Mr Johnson decided drastic action was needed.
A Downing Street spokesman said: "The Government, chief medical officer and chief scientific adviser have jointly agreed that urgent action is necessary after seeing the number of daily positive cases rise to almost 3,000 recently."
Police chiefs had urged the Prime Minister to simplify the rules on social gatherings to make them easier to implement, and he will say: "We are strengthening the rules on social contact, making them easier to understand and for the police to enforce.
"It is absolutely critical that people now abide by these rules and remember the basics – washing your hands, covering your face, keeping space from others and getting a test if you have symptoms."
The new fines for breaking the six-person rule will be classed as civil penalties under the Public Health Act, but repeated refusal to pay any fine is a criminal offence that can result in a court appearance and, ultimately, a prison sentence.
Matt Hancock, the Health Secretary, announced that Bolton now had 120 cases per 100,000 people – six times the UK's threshold for putting foreign countries on the "red" quarantine list.
Mr Hancock said data from the Government's contact tracing programme showed that the rise in cases had been fuelled by people in their 20s and 30s socialising in pubs (the graphic below shows the increasing coronavirus infections among younger people).
As well as being forced to close between 10pm and 5am, all restaurants, cafes, bars and pubs in Bolton are now restricted to takeaway service only.
It will be illegal for people in the town to socialise with people from outside their own household, even outdoors – a tighter restriction than the six-person rule, which permits people from different households to meet. Stricter restrictions have also been placed on visits to care homes in Bolton.
A senior Government source said measures being discussed by ministers to contain the new spike in cases included extending the curfew nationwide, and Mr Hancock told MPs on Tuesday that, in Belgium, "the case rate has come right down when they put a curfew in place".
A senior Whitehall source, however, said that while a nationwide curfew was "theoretically" possible, the measure was more likely to be used in local lockdown areas.
The Health Secretary also urged university freshers to help keep the virus under control, saying: "I know social distancing can be hard, and how it can be extra tough for students who will be starting university – but please, stick with it and play your part in getting this virus under control.
"Ultimately, when the students are off campus then they are citizens like everybody else. Hence the focus on the social distancing rules that we all have to follow. But we have seen the biggest rise in 17 to 21-year-olds, many of whom are going to go to university in the coming weeks."
Mr Johnson told his Cabinet to ensure there is "no complacency" from the public, warning that other countries that have seen an increase in infections also saw a rise in hospitalisations weeks later.
Prof Whitty wrote on Twitter: "We have, through the extraordinary efforts of the whole population, got Covid rates right down. They are now rising again, especially in those aged 17 to 29. If we stop social distancing, Covid comes back. We all need to protect others."
The West Midlands Mayor, Andy Street, said there had been "a very notable increase in Birmingham and Solihull" infection rates in the last few days. Mr Street said the imposition of "additional restrictions" was now looking "likely", while stressing that no final decisions had yet been taken.
In Birmingham, the infection rate in the week ending September 5 was 62.4 cases per 100,000, while in neighbouring Solihull it was 46.1, according to NHS Digital.
On Wednesday, the Government will launch a new public information campaign warning people of the extra risk of coronavirus spreading as people spend more time indoors this winter.
The "Hands. Face. Space" campaign, running across TV, radio and digital media shows how the virus spreads between people, surfaces and air.