The Balearic Islands, which include the tourist hotspots of Ibiza, Majorca and Minorca, will be moved back to the amber travel list.
Transport Secretary Grant Shapps said the measure will take effect in England from 4am on Monday, which will coincide with changes to the rules on quarantine for people arriving from amber destinations.
The Scottish and Welsh government have announced they will make the same move, with Northern Ireland expected to put out a statement later.
From Monday, people who are fully-vaccinated and the under-18s will not have to isolate after returning from countries on the amber list.
This means the move will mainly impact younger adults, as they are more likely to not have received two COVID-19 vaccinations.
Mr Shapps said that since the Balearics were moved to the green watchlist two weeks ago "we've seen the rates double and also the rate of positivity of these tests double, meaning that we're going to need to move quickly, as we said we might always have to do".
"Surely no one can be out there thinking we can travel and just rely on things not changing," he said.
"When we see things change for the safety and security of everyone back home we do need to react and act, and that's what we're doing today."
Latest figures show the infection rate for the Balearics is 205 cases per 100,000 people, compared with 329.9 for the United Kingdom.
For Cameron Tait, having to isolate would mean missing his sister's wedding back in the UK, so he is trying to return from Ibiza before the changes take effect.
He told Sky News: "I got quite agitated or anxious that there was the potential for them to change it to an amber country and that's what worried me the most.
"The wedding means a lot and family means a lot to me. I was just worried about that."
Emily Howells was due to go to Ibiza on Friday but she has not yet had both vaccine doses.
She said: "There's one person out of our whole group who is double-vaccinated, so she's absolutely fine, she can come back and it doesn't really affect her, but the rest of us have got to consider whether we can actually isolate for 10 days.
"It has been very, very stressful, not feeling great."
The British Virgin Islands are also being put on the amber list.
Bulgaria and Hong Kong will be added to the green list, meaning quarantine-free travel regardless of people's vaccine status.
Croatia and Taiwan are being moved to the green watchlist. The rules are the same as the green list, but nations on the green watchlist are at risk of moving from green to amber.
Cuba, Indonesia, Myanmar and Sierra Leone will be added to the red list.
Although the requirement to isolate is being scrapped for the double vaccinated from Monday, they will still have to take a test three days before returning and have a PCR test on day two back in the UK - but not on day eight.
People arriving in the UK from green list countries do not have to quarantine but do have to take a private PCR test two days after they return.
However, some holiday destinations have their own quarantine rules so travellers may have to self-isolate on arrival even if they do not in the UK.
"I think we all know by now that travelling at the moment is not the same as it was before there was a global pandemic," the transport secretary said.
"It does mean that when people book, particularly if you're booking to a green watchlist country, you need to make sure you can get your money back, you need to make sure you can rebook your accommodation whenever required.
"That is really what this demonstrates more than anything else."
Labour's shadow transport secretary Jim McMahon repeated his party's call for the government to publish the data that underpins its decisions on the traffic light system.
"People are booking holidays in good faith and now face the prospect of losing out because ministers refuse to be straight with the public," he said.
Rory Boland, Which? travel editor, said the latest changes "further highlight that anybody considering booking a holiday this summer should only do so if they are prepared to rebook, often at extra cost, and potentially face more expensive testing or quarantine if the rules suddenly change".
"It can be near impossible to get your money back in these circumstances, and while flexible booking policies that offer to rebook your holiday for free can be of use, the devil is in the detail," he said.
"You will always have to pay any difference for new dates, and price increases can be significant."
Virginia Messina, a senior vice president at the World Travel and Tourism Council industry body, said: "This will throw summer holidays into disarray for tens of thousands of people.
"Businesses given the lifeline of holidays to the Balearics will also be left floundering as bookings collapse and customers clamour for refunds, piling on further financial pressure."
Source: Sky News