Up to three households can meet up during a five-day Christmas period of 23-27 December, leaders of the four UK nations have agreed.
The leaders said 2020 "cannot be a normal Christmas" but family and friends will be able to see each other in a "limited and cautious" way.
People can mix indoors in homes, places of worship and in outdoor spaces.
But existing rules on hospitality and venues will remain and the bubbles people form must be "exclusive".
This means people cannot get together with those from more than two other households and, once a bubble is formed, it must not be changed or be extended further.
Travel restrictions across the four nations and between tiers will also be lifted to allow people to visit families in other parts of the UK.
Covid-19: Three households can mix over Christmas in UK https://t.co/A8RAWnypGn
— Masato Jones (@masato_jones) November 24, 2020
The leaders of England, Scotland, Wales and Northern Ireland reached the agreement at a meeting of the UK government's emergency committee, Cobra.
In a joint statement, they said: "Even where it is within the rules, meeting with friends and family over Christmas will be a personal judgement for individuals to take, mindful of the risks to themselves and others, particularly those who are vulnerable.
"We need everyone to think carefully about what they do during this period, balancing some increased social contact with the need to keep the risk of increased transmission of the virus as low as possible."
Michael Gove, the Chancellor of the Duchy of Lancaster, said people will be able to "enjoy something closer to a normal Christmas".
He said it was an opportunity for people to "meet close friends and family in a very restricted fashion, in order to ensure that those we love can be with us at this special season".
He added: "We all know that Christmas this year won't be as it has been in years past. But all the governments agreed we should balance the need to protect public health with also allowing people to be with their loved ones."
Wales' First Minister Mark Drakeford said: "People will be allowed to do what the law will allow them to do, but this is not an instruction to travel, it's not an instruction to meet with other people. People should still use a sense of responsibility."
Scotland's First Minister Nicola Sturgeon added: "The virus is not going to be taking Christmas off, so although we want to give a little bit of flexibility for Christmas we are still urging people to be very cautious and to use this flexibility responsibly and only if you think it is necessary."
Northern Ireland's First Minister Arlene Foster welcomed the announcement and said she hoped it would give people space to plan.
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