Critical workers will be able to avoid self-isolation if they come near someone with Covid in a bid to keep trains running and avoid food shortages.
On Monday, Boris Johnson expanded the list of sectors whose employees could be exempt from the normal rules as he sought to ease the impact of the "pingdemic".
Train drivers, care home staff, medicine manufactures, border security guards, soldiers and people who work in food, water and electricity supply are among those who could benefit.
However, Mr Johnson doubled down on plans to not allow the double-jabbed to avoid self-isolation if pinged until August 16, stressing that the setup was needed to keep people safe.
The Prime Minister said contact tracing was "one of the only shots we’ve got left in our locker" to stop the spread of Covid and that those told to self-isolate must obey the rules.
More than half a million people were told to self-isolate by the NHS Test and Trace app last week because they may have come into contact with someone who has the virus. The "pinging" alerts have seen scores of workers made to stay at home, with some restaurants, train lines and supermarkets being forced to shut as a result.
Over half a million 'pinged' at start of July
On Monday night, industry leaders said Mr Johnson’s expansion of the exemption list did not go far enough and warned that much more disruption to the economy was to come this summer.
The Telegraph can reveal that the "pingdemic" at the heart of the Government has expanded since Sajid Javid, the Health Secretary, tested positive for Covid on Saturday.
Mr Johnson’s chief of staff, Dan Rosenfield, and the health minister Edward Argar are both self-isolating after contact with Mr Javid in the days before his positive test results. Lord Bethell of Romford, another health minister, and scores of Mr Javid’s officials are also working from home as a precaution this week, disrupting usual work flows.
Under current rules, anyone who is pinged must self-isolate for 10 days as a precaution, even if double vaccinated, with no amount of negative tests able to end the quarantine.
Mr Johnson on Monday announced an expansion of the setup for NHS workers, revealed on Sunday, which gives them a limited ability to continue working if alerted about a close Covid contact.
The scheme allows the worker to have an immediate PCR test and, if negative for the virus, return to work. They must take lateral flow tests daily and only attend work and then go home, not socialising in pubs or restaurants.
The Prime Minister said: "As you know, we will be moving on August 16 to a system of testing rather than isolation for those who are double vaccinated, by which time we hope that the wall of immunity in our country will be even higher.
"And, in the meantime, I want to assure you that we will protect crucial services including the staffing of our hospitals and care homes, the supplies of food, water, electricity and medicines, the running of our trains, the protection of our borders and the defence of our realm, by making sure that a very small number of named, fully vaccinated, critical workers can leave isolation solely for this work.
"But for the vast majority of us, myself included, I’m afraid we do need to stick with this system for now."
Mr Johnson said he understood the frustration of those pinged but noted that people identified as contacts of cases are at least five times more likely to be infected than others.
The Prime Minister, self-isolating at Chequers after contact with Mr Javid, also denied believing he was above the rules for others after it was initially announced on Sunday morning that he would take part in a pilot to test daily on Sunday morning, before a swift reversal.
A spokesman also declined to reveal whether Carrie Johnson, the Prime Minister’s wife, was self-isolating with him at Chequers.
Downing Street meanwhile ruled out imminent changes to how the NHS app functions.
One well-placed government source said tens of thousands, rather than hundreds of thousands, of workers would be likely to benefit from the expansion of the self-isolation exemption.
Despite the announcement, fears mounted that if the number of people told to self-isolate continued to surge then the economic recovery could be stifled even with the new exemption announcement.
Greene King has been forced to shut 33 pubs in the past week after staff were told to isolate by the NHS app, while other venues have been forced to shorten their hours.
On Monday night Kate Nicholls, the chief executive of UKHospitality, called for a self-isolation policy that "works for the whole economy". "It’s incredibly misguided for the Government to pick out parts of any sector as ‘critical’ and not others,” she told The Telegraph.
Composer Andrew Lloyd Webber attacked the "blunt tool" of self-isolation rules after having to cancel the opening nights of his musical Cinderella. "Freedom Day has turned into closure day", he said.
Oliver Dowden, the Culture Secretary, said he was "deeply disappointed" to hear about the cancellation and added: "Whilst the need to self-isolate is an economy-wide issue, I recognise the particular challenges it presents to the arts and I’m strongly making the case for that in government."
Amid frustration over the self-isolation system, more than a quarter of Britons said they would not quarantine if told to by the app if they had no symptoms. That rose to 42 per cent if they had been notified and had a negative lateral flow test, and 50 per cent if they had a negative PCR test, according to a YouGov poll.