Chancellor Alexander Schallenberg said it would last a maximum of 20 days and there would be a legal requirement to get vaccinated from 1 February 2022.
He was responding to record case numbers and one of the lowest vaccination levels in Western Europe.
Many other European countries are imposing restrictions as cases rise.
"We don't want a fifth wave," said Mr Schallenberg after meeting the governors of Austria's nine provinces at a resort in the west of the country.
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For a long time, there had been a consensus over avoiding mandatory vaccinations, the chancellor said.
Latest figures show an incidence rate of 990.7 cases per 100,000 people in the past week, and Health Minister Wolfgang Mückstein said imposing a lockdown was a "last resort".
A record 15,809 cases were reported in the past 24 hours, in a population of under nine million.
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Under the measures, Austrians will be asked to work from home, non-essential shops will close, and schools will remain open for children who require face-to-face learning.
They will continue until 12 December, but will be reassessed after 10 days.Esther Solaja
posted 2021-11-19 13:08:57