After days of speculation over rising cases in the borough the government confirmed the decision this afternoon.
It means that from Saturday people will not be allowed to socialise indoors with people from outside their household or social bubble.
People socialising outdoors are also only allowed to do so in a group of six – including in gardens or parks.
Liz Noakes, Telford and Wrekin’s Director of Public Health, said that the infection was being spread significantly through people meeting in homes.
She said: "Transmission in the home or between households is at the heart of the spread of Covid-19.
“We urge everyone in the borough to follow these new restrictions and not to visit other households.
“Everyone in Telford and Wrekin has a role to play in the fight against coronavirus and we need everyone to take these new restrictions extremely seriously.
“Taking action now will help avoid Telford and Wrekin being placed in the “Very High” alert level, where pubs and other businesses are closed and further restrictions apply on households mixing.”
The Tier 2 restrictions mean that businesses and venues can continue to operate in a Covid-secure manner, other than those that are already closed in law.
Schools, universities and places of worship will also remain open.
Pubs, restaurants and bars must continue to close at 10pm but takeaways can operate after 10pm through a delivery service, collection or drive-through only.
Weddings and funerals can go ahead with restrictions on the number of attendees.
Exercise classes and organised sport can continue to take place outdoors and indoors, as well as soft play areas as long as people do not mix with those from other households indoors, and the venue is operating to Covid Secure guidelines.
As an extra measure Telford & Wrekin Council has advised care homes to close to all but essential visits.
The cases in the borough have risen to 396 in the seven days up to October 25 – up 43 per cent on the previous seven days.
The rate of infection has also gone up to 220 cases per 100,000 residents, compared to 154 cases per 100,000 in the previous week.
Infection rates in the over 60s have also increased by 70 per cent in the last week
The Newport area continues to have the highest infection rate in the borough.
The rise is associated with the high number of cases among students at Harper Adams University – the infection rate excluding 18 to 24 year olds is no higher in Newport and surrounding area than it is elsewhere in the borough.
There have been a further 45 cases among students in the seven days up to the 25 October. In total there have been 137 cases in students at the university.
As of yesterday, there were 35 patients with Covid-19 at the Princess Royal and Royal Shrewsbury hospitals including seven on ITU/HDU.
There have also been six deaths from Covid at the PRH during October.
Councillor Shaun Davies, Labour leader of Telford & Wrekin Council, added: “Thank you to everyone for the part you played in keeping our borough in the lowest level of coronavirus restrictions.
"With the number of cases rising locally and nationally, our move to Tier Two means it’s more important than ever that we stick to the rules and all work together to help stop the virus spreading further in the community.
“We must do all we can to protect people’s health and keep the borough’s economy moving.”
Wrekin MP Mark Pritchard said: "This is not good news for anyone but the infection rate needs to come down whilst trying to keep the local economy open.
"Whilst there are more restrictions in place from Saturday these are not as severe as the past national lockdown or the Tier 3 restrictions.
"Let us hope the borough can avoid Tier 3. These are challenging times for everyone but a vaccine is on the close horizon which will take control of this once in a hundred year pandemic."
Telford MP Lucy Allan said: "Telford’s tier status has been under review throughout this week with meetings being held with local partners and representatives.
"Following a further meeting today, it was decided that Telford will move to Tier 2 from Saturday.
"Tier 2 restricts people meeting socially in any indoor setting and it will hit our restaurants and pubs hard. It will increase isolation which has a significant impact on mental health. The decision will be based on a careful and thorough analysis of all the data, not just infection rates.
"The Government is doing all it can to avoid the terrible harm a full lockdown causes to lives, livelihoods, health and wellbeing. The targeted approach is helping slow rates of increase, giving the NHS space to treat the most seriously ill.
"I will continue to work with everyone in our community who is experiencing hardship or struggling at this time and ensure businesses, employees and the self-employed continue to receive the support they need."