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Welsh pubs, restaurants and cafes will not be able to serve alcohol from Friday and will not be able to open to customers after 18:00 GMT.
Prime Minister Mark Drakeford announced the new rules to address an increase in coronavirus cases.
Business groups said the move would devastate the Welsh hotel industry, with “guaranteed” closures.
Indoor entertainment and visitor attractions, including cinemas, museums and galleries, will also need to close.
Businesses can offer a take-out service after 18:00 and, if they have a license, they can sell alcohol to go until 22:00.
Conservative Senedd leader Paul Davies said the Welsh government’s national approach was unfair in areas with low Covid rates.
Plaid Cymru said hospitality was “paying the price” for the lack of stricter measures after the firewall shutdown ended on November 9.
Drakeford said that without change there could be between 1,000 and 1,700 preventable deaths during the winter.
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The prime minister said that companies affected by the restrictions would be offered £ 340 million in support, which he claimed was “the most generous financial assistance package in the UK”.
Drakeford told a news conference: “I know these new restrictions will be difficult as they will come at one of the busiest times of the year for the industry.
“Unfortunately we continue to face a virus that is moving incredibly fast through Wales and a virus that will seize every opportunity when we spend time together.”
The case rate has risen from 187 per 100,000 people for seven days Friday to 210 cases per 100,000 people, Drakeford added.
The restrictions take effect at 18:00 on Friday and are similar to hospitality restrictions within level three areas in Scotland.
However, the rule that allows four people from four different households to meet inside pubs and restaurants will remain.
The decision will be reviewed on December 17.
Bingo halls, bowling alleys, soft-play centers, casinos, skating rinks, and arcades must also close.
Meanwhile, current restrictions on travel to England, implemented while there is a blockade on the border, are being reviewed.
The prime minister said he would make a new announcement later this week.
‘Devastating blow’
The CEO of one of Wales’ largest breweries says she wants the Welsh government to show that Covid is spreading in pubs and restaurants.
“Where is the scientific evidence that you are more at risk in a pub than at home or in a supermarket?” said Connie Parry of the Tomos Watkin Brewery in Swansea.
Ian Price, director of business lobby CBI Wales, warned that closures and job losses were “almost guaranteed” in pubs and restaurants.
“The prime minister’s announcement is devastating for a Welsh hotel industry that is already reeling from a cycle of damaging restrictions,” he said.
Dai Dearden, general manager of The Grange pub in Cardiff, said the announcement was a “hammer blow.”
“I think it will shut us down for the moment at one of the busiest times of the year,” he said, adding that it would have “a massive effect on the health and well-being, and mental state, of my staff and our clients.”
Tom Simmons, chef and co-owner of Thomas in Pontcanna, Cardiff, said: “Spending at our restaurant is around 70% on food and drink, and we will lose customers who know they can’t have a drink with their meal. Many don’t. they will come back for that. “
“I don’t see any reason or logic behind this. All it will do is bring people to meet at home and drink instead; it would be structured with restaurants and pubs, not people’s houses.”
Joanne Cooney runs the Irish Bar in Llandudno in Conwy County, which currently has the lowest coronavirus case rate of the 22 counties in Wales.
She said: “The numbers are high in the big cities and we are being penalized for them. Our numbers are low. We should have been able to open and trade.”
“People are not going to come in. They just turned us into a cafeteria, the city has many cafeterias, that’s not what we are.
Ben Francis of the Federation of Small Businesses said it was “incredibly important” that the promised funding “can be implemented urgently.”
“There is no getting around the fact that today’s announcement will be a devastating blow to indoor entertainment and hospitality companies that have fought tooth and nail to protect jobs, remain viable, and provide a safe environment for your staff and customers this year. “
Meanwhile, Folly Farm Zoo and Adventure Park in Pembrokeshire announced it was closing, saying it “relied heavily” on the inside of the business.
A spokesman for the Welsh Visitor Attractions Association, which represents more than 70 family attractions in Wales, said the Welsh Government did not consult with tourism leaders before deciding on the new rules.
“Wales’s health is paramount, but the way tourism decisions are being made is outrageous.
“Some members have stated that the Welsh Government’s no-consultation policy is affecting both their health and well-being, and that the Welsh tourism industry is in a state of utter despair at the way it is. being treated, “it said.
image copyrightGeography / Gareth James
The prime minister said at the press conference that the evidence “is there” that the virus is spreading in hospitality, and said it could be seen in a series of reports from the Welsh Government Technical Advisory Cell.
“When people meet in a hospitality setting, you are not just having a gaze encounter with someone like you do when you go to a supermarket,” he said.
“You are sitting next to people for a significant period of time.”
BBC Wales has asked to see the evidence cited by Drakeford.
A spokesman for the Welsh government referred to a report by the scientific advisory group for emergencies (Sage) in September that estimated that the closure of bars, pubs, cafes and restaurants would have a “moderate impact” on the transmission of Covid.
Hotel businesses were allowed to open after the firewall was completed in early November.
Drakeford said medical and scientific experts had warned that by January 12, the total number of people with Covid in hospital could rise to 2,200 “unless we respond now.”
According to the Library of the House of Commons, there are 2,190 pubs in Wales.
image copyrightfake imagesWhat is the political reaction?
Paul Davies, head of the Conservative Welsh Senedd, said: “This general approach across Wales is disproportionate and will unfairly affect parts of the country where infection rates are significantly lower than others, and will damage the sector to such an extent that much of may not recover. “
Plaid Cymru said it had called for stricter measures when Wales came out of its fire lockdown.
“The Welsh Labor government did not do that and now hospitality is paying the price,” said Helen Mary Jones, Plaid’s economics spokesperson.
Caroline Jones of the Independent Reform Alliance in the Senedd said the national approach would “further strangle the hospitality sector at the same time of year in the run-up to Christmas where many pubs, cafes and restaurants make their profits” .
image copyrightfake imagesWhat business support will be available?
The £ 160 million “Restrictions Business Fund” will provide grants of up to £ 5,000 to companies in the hospitality, tourism and leisure sectors paying non-national rates (NDR).
The Government of Wales estimated that around 60,000 companies with a taxable value of less than £ 150,000 would be supported.
A “sector specific” Economic Resilience Fund of £ 180 million would be made available to hospitality, tourism and leisure companies.
The Welsh government said small and medium-sized businesses that meet the criteria could receive up to £ 100,000, while larger companies could receive up to a maximum of £ 150,000.
Analysis by Sarah Dickins, BBC Wales Economics Correspondent
The financial support for the hotel industry is significant and much more than has been given before.
But arriving just a month after the two-week firewall, these restrictions will be a fatal blow to some merchants.
Once again, the Government of Wales is having to walk a fine line, beating the virus by reducing the number of people we meet, while at the same time trying to protect the businesses we usually go to.
Urban pubs may still attract shoppers for a “dry” lunch, but they’re unlikely to spend as much as usual.
Country pubs, often the main meeting place for a community, rely more on their nightlife.
The money they receive from the Welsh government could well pay for overheads like rent and insurance, but these are companies that have already been very successful this year.
