The final decision on which areas go into each tier will be made by Boris Johnson, the Government has confirmed.
The Prime Minister is due to make the announcement on which areas of England will go into Tiers 1,2 and 3, on Thursday.
The restrictions by area will replace the full national coronavirus lockdown ending on December 2.
Tier decisions will be based on public health regulations informed by the latest available data.
The final decision will be made by the Prime Minister, the Government has said.
Factors will include case detection rates, the rate cases are rising or falling, positivity in the general population and pressure on the NHS.
Local context and exceptional circumstances, such as a local but contained outbreak, will also be considered.
And areas placed in Tier 3 will be given rapid turnaround tests to help bring down infections and reduce restrictions.
Decisions will be reviewed for the first time on Wednesday 16 December.
Health and Social Care Secretary Matt Hancock said: “Thanks to the hard work and sacrifice made by people up and down the country, we are able to move out of national lockdown and into more targeted local, tiered restrictions.
“I know for those of you faced with tier 3 restrictions this will be a particularly difficult time but I want to reassure you that we’ll be supporting your areas with mass community testing and extra funding.
“By following the rules together we can get out of these tough measures.”
Local councils will continue to receive extra funding while in Tiers 2 or 3 until April.
Areas in Tier 3 will get £4 per head of population per month, while Tier 2 councils will get £2 per head of population per month.
However regardless of tier all of the UK will enjoy some relaxation of the measures for five days over Christmas when three households will be allowed to bubble togther.