The county borough of Caerphilly is to be placed under a local lockdown from 18:00 BST on Tuesday after a “rapid” rise in coronavirus cases.
People will not be able to leave or enter the borough without good reason, the Welsh Government said.
Face masks will be required for everyone over 11 in shops and people will not be able to meet indoors.
Seeing others within extended households will be banned, and no overnight stays will be allowed.
There have been 133 new Covid-19 cases in Caerphilly county in the last seven days.
The Welsh Government said that at 55.4 cases per 100,000 population, it was the highest rate in Wales and one of the highest in the UK.
Wales’ Health Minister Vaughan Gething said the virus was circulating in the community and it was “only a matter of time before we start to see more serious cases, which need hospital treatment”.
The restrictions mean people cannot enter or leave Caerphilly county borough – which includes Caerphilly town, Ystrad Mynach, Blackwood, Newbridge and Risca – without a “reasonable excuse”.
That includes work, if people are unable to work from home, or making a compassionate visit to a loved one, or to give care.