The measures, which came into force at midnight, were approved by MPs in the Commons on Tuesday with the support of 291 votes to 78.
More than 55 million people in the country are being placed in the top two strictest tiers, with London in Tier 2.
The rules are tougher than in the previous tier system England was face with before its second lockdown began in November.
Some 55 Tory MPs voted against the government plan in what amounted to the biggest rebellion of Prime Minister Boris Johnson's premiership.
Thousands of non-essential shops will now attempt to make a comeback as the national lockdown ends.
In its place, much of England will be under Tier 2 and 3 of the new Covid-19 restrictions - which limits social contact between households, but allows non-essential shops to reopen.
Business leaders hope customers will return to their local stores in the final weeks before Christmas.
In preparation, retailers have been working hard to make their buildings safe for customers while some have organised festive events to entice shoppers.
As before when shops reopened following the first lockdown, many have implemented measures to limit the number of people entering shops.
They are also enforcing social distancing rules, setting up hand sanitiser stations and carrying out more frequent deep cleaning.
In a bid to liven up the capital’s West End, Westminster City Council will extend al fresco dining in central London for another six months.
Council leader Rachael Robathan said the scheme, which allows venues to provide "pop up" dining areas in streets, continued to be an important way of supporting the hospitality industry in London.
"We have 3,700 restaurants, pubs and bars in central London and they help to support around 80,000 jobs," she said.
"Hospitality is a big employer for us and while the sector faces another tough few months under Tier 2 restrictions, at least we can support those venues who can offer outside space."
Department store Selfridges is setting up a Christmas market outside of its London store.
Described as a "foodies' paradise", it will also include several rides including a giant helter-skelter.
A spokesman for Selfridges said: "Think a mini version of Hyde Park's Winter Wonderland which was cancelled this year."
For customers wanting to head to John Lewis, they are encouraged to go on the store's website to pre-book a slot to visit their local shop up to 14 days in advance.
Meanwhile, retail giant Primark will reopen its 153 stores with longer shopping hours, while 11 stores will be open for 24 hours from 7am on Wednesday.
Homeware retailer Ikea will open 19 stores across England, including Tottenham Court Road's planning studio which will reopen for appointments and walk-ins.