The UK's mobile providers are being banned from buying new Huawei 5G equipment after 31 December, and they must also remove all the Chinese firm's 5G kit from their networks by 2027.
Digital Secretary Oliver Dowden told the House of Commons of the decision.
It follows sanctions imposed by Washington, which claims the firm poses a national security threat - something Huawei denies.
Mr Dowden said the supply ban would delay the UK's 5G rollout by a year.
The technology promises faster internet speeds and the capacity to support more wireless devices, which should be a boon to everything from mobile gaming to higher-quality video streams, and even in time driverless cars that talk to each other. 5G connections are already available in dozens of UK cities and towns, but coverage can be sparse.
Mr Dowden added that the cumulative cost of the moves when coupled with earlier restrictions announced against Huawei would be up to £2bn, and a total delay to 5G rollout of "two to three years".
"This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run," he said.
Because the US sanctions only affect future equipment, the government has been advised there is no security justification for removing 2G, 3G and 4G equipment supplied by Huawei.
However, when swapping out the company's masts, networks are likely to switch to a different vendor to provide the earlier-generation services.
Huawei said the move was "bad news for anyone in the UK with a mobile phone" and threatened to "move Britain into the digital slow lane, push up bills and deepen the digital divide."
The action, however, does not affect Huawei's ability to sell its smartphones to consumers or how they will run.
China's ambassador to the UK said the decision was "disappointing and wrong".
"It has become questionable whether the UK can provide an open, fair and non-discriminatory business environment for companies from other countries," tweeted Liu Xiaoming.
But US Secretary of State Mike Pompeo welcomed the news, saying: "The UK joins a growing list of countries from around the world that are standing up for their national security by prohibiting the use of untrusted, high-risk vendors."
Source: BBC
BDST: 1357 HRS, JUL 15, 2020
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