London will still enjoy a televised New Year's Eve fireworks display featuring music from Elton John and Dua Lipa.
The annual bonanza organised by the Mayor of London usually takes place on the Victoria Embankment by Big Ben, but was officially axed for a second year running due to concerns over the Omicron variant.
However, a display will now go ahead at a variety of London locations and be screened live on BBC One and BBC iPlayer. Members of the public are not invited to attend the display in person, and all music will be pre-recorded.
Mr Khan announced in October that the traditional display, which would have drawn hundreds of thousands of people to Victoria Embankment, had been called off, blaming Covid 'uncertainty'.
Health Secretary Sajid Javid criticised the decision, saying there was 'no reason' the annual tradition could not go ahead after the government gave the go ahead for NYE gatherings.
The Tory told LBC: 'Obviously that's a decision for the Mayor, but from my point of view, I can't understand why that can't happen.
'I mean, I think there's a perfectly safe way that that can take place, so I really don't understand that decision, but as I say, that's not a decision for the government. It's the Mayor's firework display, so I hope he can reconsider it.'
Earlier this month Mr Khan also called off a NYE event in Trafalgar Square which would have involved 6,500 key workers and members of the public.
A further 189,213 coronavirus cases were recorded across the UK yesterday - a new record high - while the number of hospital patients with Covid in England rose to 11,452, a rise of 61 per cent in just one week.
Estimates published by the Office for National Statistics today suggested one in 25 people in England had Covid in the week to December 23, up from one in 45 in the week to December 16.
One in 25 equates to approximately two million people - the highest number since the ONS started estimating infection levels in England in May 2020.
Boris Johnson will decide next week whether to impose new coronavirus restrictions to limit indoor socialising, The Times reported.
The Prime Minister opted not to impose new curbs between Christmas and New Year's Eve but rising Covid case numbers are fuelling fears that new measures could be on the horizon.
Mr Johnson said in his New Year's Eve message that the nation's position in the battle against the disease is now 'incomparably better than last year' thanks to the vaccine rollout.
It came as NHS bosses warned that the Government 'needs to be ready to introduce tighter restrictions at real speed should they be needed'.
Chris Hopson, the head of NHS Providers, said new curbs 'may be needed at pace if the evidence warrants it' as he said health bosses 'still don't know' if there will be a surge in elderly hospitalisations which could trigger Mr Johnson to act.
Meanwhile, a Government scientific adviser today warned it is likely the NHS will be overwhelmed by the spread of the Omicron variant.
Professor Peter Openshaw, who sits on the Government's New and Emerging Respiratory Virus Threats Advisory Group (Nervtag), said: 'I think we haven't quite reached the threshold that was set by Government in terms of the NHS being overwhelmed, but it looks like that will be reached quite quickly.'
#notgoingout: Brits take to Twitter to declare they are staying in for New Year's Eve as nightclubs offer half-price deals or even stay shuttered due to Omicron fears
By Tom Pyman for MailOnline
Britons have taken to Twitter to declare they are #notgoingout on New Year's Eve tonight as the country remains gripped by Omicron panic.
Dozens of people shared their low-key plans to stay at home on social media, including watching Jools Holland, eating homemade pizza and drinking a mug of cocoa.
It comes as nightclubs in England, which are still allowed to open unlike neighbouring Scotland and Wales, frantically offer half-price deals in a bid to encourage revellers to ring in the new year with them.
Widespread celebrations have already been cut short, after London mayor Sadiq Khan cancelled the traditional firework display at Trafalgar Square due to the surge in Covid cases.
People in Manchester told BBC Radio Four's Today programme this morning that they had concerns over going out.
One said: 'There's a plan in place that some friends might be meeting up in a local pub. I'm a little dubious as to whether I want to, so I'm more likely to spend it at home, to be honest.'
Another added: 'We have been invited to a house party with a few neighbours. We haven't quite decided yet but it's something we're thinking about.'
A third said: 'I'm spending it with a couple of friends, we'll probably get a takeaway, that sort of thing. I'm certainly not going into town.'
Nightclub owner Alex Proud said mixed messaging from the government over end of year celebrations had created 'a really dire situation' for the industry.
Alex Proud, who runs Proud Embankment in Brighton, told Sky News: 'There's hardly any staff here today, we're not sold out tonight and that story is the same across the country.
'Venues that are normally sold out two weeks in advance are half sold out, and we are screaming in pain.
'Bookings are massively down. In my venue in Brighton we're doing a half price sale now, and that's unheard of in any venue.
'Your local pub doesn't do a sale on New Year's Eve. It's disastrously bad.'
With venues forced to close in other areas of the UK, Scottish and Welsh revellers have been arriving in England before hitting the town later tonight.
Work and Pensions Minister Chloe Smith said people are 'more than free to move around' the UK over the New Year on Thursday.
Asked if it would be wrong for people from Scotland to travel across the border into England to celebrate the New Year, Ms Smith told BBC Radio 4's World At One programme: 'Well, I think perhaps I should just add the obvious constitutional point here, which is that we are one country and people are more than free to move around inside our country under the general law, obviously.'
From December 15, Covid passes for entry into nightclubs and other venues have been in place, and this also applies to indoor events with 500 or more people, where they are likely to stand or move around, such as in music venues.
Meanwhile, Waitrose has seen a surge in people searching for recipes online, suggesting middle class families are planning to stay in for dinner at home rather than going out.
The supermarket chain says searches for 'New Year's Eve recipes' are 160 per cent higher on its website than 12 months ago, while four times as many people are looking for 'dinner party recipes', compared to this time last year.
Will Torrent, of Waitrose, told the Times: 'It's clear our customers are hosting intimate dinner parties for New Year's Eve this year and findings show that just over a third of shoppers are treating themselves and their guests to high-end, quality products and specialty ingredients.
'We're seeing people upgrading their menus to kick off 2022.'
Jools Holland's Annual Hootenanny is once again expected to be widely viewed on BBC Two tonight in a packed TV schedule.
Popular soaps EastEnders, Emmerdale and Coronation Street all have episodes this evening, there is a special of Channel 4's The Last Leg, while BBC One marks the end of the 2021 with 'The Big New Years & Years Eve Party with Kylie and Pet Shop Boys'.
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