The holiday hotspot, including the islands of Madeira and the Azores, will be removed from the green list exempting the need to quarantine on return from 4am on Tuesday.
Sri Lanka, Egypt and five other countries will also be added to the red list requiring isolation in a Government-approved hotel, it was announced on Thursday afternoon.
Labour criticised the “chaos” as reports about the restrictions dripped out of the Government ahead of official confirmation and travel bosses said the move will cause “untold damage to customer confidence”.
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Ministers confirmed Portugal would be placed on the amber list following a meeting between the Westminster and devolved governments, as well as the Joint Biosecurity Centre.
People returning to the UK from Portugal will be required to self-isolate at home for 10 days as part of coronavirus restrictions.
Afghanistan, Bahrain, Costa Rica, Sudan, and Trinidad and Tobago will also be placed on the red list, meaning people arriving in the UK from those nations will be required to stay in a quarantine hotel for 11 nights.
In an interview, Mr Shapps said: “I want to be straight with people, it’s actually a difficult decision to make, but in the end we’ve seen two things really which caused concern.
“One is the positivity rate has nearly doubled since the last review in Portugal and the other is there’s a sort of Nepal mutation of the so-called Indian variant which has been detected and we just don’t know the potential for that to be vaccine-defeating mutation and simply don’t want to take the risk as we come up to June 21 and the review of the fourth stage of the unlock.”
Andrew Flintham, the managing director of the TUI UK travel group, blasted the announcement as “another step back for our industry”.
“After promises that the Global Travel Taskforce would result in a clear framework, removing the damaging flip flopping we all endured last summer, the Government decision to move Portugal straight from green to amber will do untold damage to customer confidence,” he said.
“We were reassured that a green watch list would be created and a weeks’ notice would be given so travellers wouldn’t have to rush back home. They have failed on this promise.”
Heathrow chief executive John Holland-Kaye added: “Ministers spent last month hailing the restart of international travel, only to close it down three weeks later all but guaranteeing another lost summer for the travel sector.
“If the Government is serious about protecting UK jobs and supporting businesses across the country, rapid action is needed to reopen flights to key trading partners, remove testing for vaccinated passengers from ‘green’ countries, and slash the cost and complexity of testing, as other G7 countries are doing.”
Many holidaymakers in Portugal face a scramble for flights home before the move is introduced.
Shadow home secretary Nick Thomas-Symonds MP said: “The UK Government have caused chaos with the mishandling of travel restrictions at the border.
“The confusion over the ‘amber list’ has led to reports of over 50,000 people travelling to the UK daily, with only a tiny percentage going into hotel quarantine and a stream of flights entering the UK from ‘Amber List’ countries.
“Labour has warned time and time again that this is leaving the door wide open to new strains of the virus.
“Moving Portugal onto the ‘Amber List’ is not the answer. The ‘Amber List’ itself should be scrapped.”
The Government’s move is a huge blow for the travel industry, as the country was the only viable major tourist destination on the green list.
It is only 17 days since the ban on non-essential leisure travel from Britain was lifted.
Portugal’s seven-day rate of coronavirus cases per 100,000 people stands at 37.2, up from 30.7 a week earlier.
Paul Charles, chief executive of travel consultancy The PC Agency, said this is a “terrible decision”.
He told PA: “They are basically putting at risk tens of thousands of jobs across aviation and the travel sector, and not showing any signs of helping the sector to recover.
“They seem to want to continue to create an atmosphere of fear among travellers, which is totally at odds with other countries.
“There are several countries which meet the criteria to be on the green list so this is clearly a politically charged decision rather than one based on data.”
The Government has previously said assessments of travel lists are based on a range of factors, including the proportion of a population that has been vaccinated, rates of infection, emerging new variants, and access to reliable scientific data and genomic sequencing.
People returning to the UK from red-list locations must stay in a quarantine hotel at a cost of £1,750 for solo travellers.