Boris Johnson is facing growing pressure to implement a widespread lockdown before and after Christmas while allowing families to meet over the festive period.
Senior figures warned that the UK's current tiers system was not enough to "get on top of the numbers" but said harsher restrictions in the coming weeks could allow some relaxation in the Christmas holidays.
Jonathan Van-Tam, the deputy chief medical officer, told ministers he was beginning to change his mind about whether regional lockdowns were enough to hold back the virus.
He presented "very, very bleak" data to a meeting of Covid-O, the the Cabinet subcommittee on coronavirus, highlighting the fact that daily hospital admissions had reached the highest level since April at 1,404.
One source said: "He highlighted the hospital admissions figure and said that his view that we can do this regionally was changing. It was a very stark intervention."
On Thursday, a further 23,000 people tested positive for Covid and 280 deaths were recorded – a rise of 52 per cent in a week.
Sources close to the Government said that it was becoming clear that Tier 3 restrictions did not go far enough and a new baseline was needed.
However, they said bringing in further restrictions to "get on top of the numbers" before Christmas could allow measures to be lifted for a couple of days so that families could enjoy some time with loved ones.
"Releasing measures for two days is unlikely to cause a big upswing," said a source. "But it won't do nothing. Christmas brings people from all over the country to sit inside together, so its quite likely to be a spreading event.
"But people want to see their loved ones and they want to make physical contact, and we have to recognise that."
A post-Christmas "circuit-breaker" could also help reverse numbers, and may be easier to implement in January than before the festive season.
"Most people want to sort of hunker down a bit in the first couple of weeks of January, and you could use that as a sort of circuit-breaker, firebreak-type situation," added the source.
There are fears that, on current infection trends, the whole country will be at Tier 3 by Christmas, and unable to meet extended family members.
One senior health official said measures were most likely to be successful if they were taken on a national basis rather than toughening up the rules for Tier 3.
"The data is extremely concerning – the virus is on the rise everywhere," the official said. "If we continue on with the 'R' rate substantially above one across the whole country, it's very clear what happens.
"More and more NHS hospitals fill up, more and more and more people are asked to isolate, and the virus continues to spread. And in the end, that's a very bad place for us to be. Something has to change."
Without further interventions, or a dramatic change in societal behaviour, all parts of the country will reach infection levels that require "at least Tier 3" restrictions, the official added.
Several more parts of the country are expected to be put into higher tiers after a meeting of the Cabinet's Covid operations committee, chaired by Michael Gove.
The committee was told that the infection rate in Liverpool is starting to flatten, likely to be used by Mr Johnson as evidence that his tier system must be given time to take effect before any more serious measures are considered.
One source said: "There are early signs that Tier 3 restrictions work when you have got everyone behind them, like in Liverpool. But there aren't such encouraging signs in Manchester, where the local leaders played politics.
"It's all about compliance. If people don't comply and the numbers keep going up, everybody knows what comes next."
Another Government source said: "People need to mentally prepare for the possibility that Christmas will be quite restricted and that this is with us to the end of March or beyond."
"It might put back a rise in infections, but it doesn’t prevent a rise in infections."
It came after Robert Buckland, the Justice Secretary, warned that "if we are seeing these trends continuing right through December, Christmas in its fullest sense won't be achievable for any of us this year".