Everyone who has bought train or coach tickets for travel during the now-scrapped five-day Christmas travel window will be able to get their money back.
The Government has promised that those who booked to travel between December 23-27 will "not be left out of pocket" by staying at home.
Transport Secretary Grant Shapps said refunds will apply to journeys in England booked on or after November 24, when the Christmas travel window was first announced.
Transport Secretary Grant Shapps said: "It is imperative that we all follow the new measures and play our part in tackling this virus, protecting others and safeguarding our NHS.
"If you booked a coach or rail journey between 23 and 27 December, you are entitled to a cash refund. This ensures no one is left out of pocket for doing the right thing - staying home in tier four, and elsewhere staying local and only meeting your Christmas bubble on Christmas day."
The cash refund will be available immediately with passengers advised to check with their travel operator for instructions on how to claim their money.
However the Government has urged people to be patient given the large amount of refunds expected to be processed over the coming weeks.
The move comes after a dramatic weekend of announcements where it was revealed the Government's relaxation of the rules over the Christmas period was hugely scaled back.
Under the new measures, travel is now limited to December 25 for people in Tiers 1-3 in England only - when public transport is usually suspended due to the holiday.
Those currently under Tier 4 restrictions are not to travel, with no Christmas bubble permitted in London and large parts of the South East.
The bubble has also been reduced to one day in Wales, Scotland and Northern Ireland.
It comes after a new variant of coronavirus was detected in the UK - with scientists saying it is 70 per cent more infectious than the original strain.
A growing number of countries in Europe and across the world have now shut their borders to the UK - banning all travel and freight.
