TUI Airways has grounded all future flights from England and Wales until December 2, starting this Thursday.
The airline is contacting affected customers in order of departure date to inform them of their options going forward.
Full cash refunds will be given to customers if preferred over re-arranging their booking with the company.
The decision comes after Boris Johnson announced on Saturday evening that holidays abroad will be banned from Thursday.
TUI posted a statement on its website shortly after 5pm on Monday saying: "Following the UK Government’s recent announcement regarding additional restrictions, TUI UK will not operate flights and holidays departing from England and Wales from Thursday, November 5 up to and including Wednesday, December 2, 2020.
"Impacted customers will be proactively contacted, in departure date order, and offered the option to amend with a booking incentive, receive an ATOL-protected refund credit note with a booking incentive, or cancel and receive a full cash refund.
"All TUI holidays between Monday 2 November and Wednesday 4 November are due to operate as planned.
"Customers due to travel before Thursday are able to amend their holiday to a later date for free. Customers currently on holiday can continue to enjoy their holiday as planned.
"As the current regulations have been implemented in England and Wales only, all holidays departing from Scotland will continue to operate as planned, unless customers are proactively contacted and told otherwise.
"We would like to thank our customers for their understanding."
The Prime Minister's announcement from Downing Street about plunging England into stricter coronavirus measures has already thrown thousands of booked holidays into chaos.
Previously this year some holiday firms have refused to refund customers because flights were still scheduled to leave for particular destinations.
Customers are advised to seek advice from their holiday firm or airline on whether travel will go ahead.