Rishi Sunak announced big changes to the Job Support Scheme (JSS) – set to replace furlough in November.
He told the Commons that even businesses not forced to shut were facing “profound economic uncertainty”.
Under the revised scheme, employers will pay less and staff can work fewer hours before they qualify.
At the same time, the taxpayer subsidy has been doubled.
The government will now fund 62% of the wages for hours not worked.
This more than doubles the maximum payment to £1,541.75.
In the most generous case, the taxpayer will now go from funding 22% of wages to just under half.
The scheme will, as before, be open to all small businesses and larger businesses that can show an impact on revenues.
It is aimed at addressing the gap in support for businesses and is available across the UK and the North of Ireland.
“I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs,” Mr Sunak said.
“I know that the introduction of further restrictions has left many people worried for themselves, their families and communities.
“I hope the government’s stepped-up support can be part of the country pulling together in the coming months.”
The chancellor also announced specific help for hospitality and leisure businesses.
The generosity of the self-employment scheme has also been doubled from 20% to 40% of profits, with a maximum grant now of £3,750 a month.
The changes to the JSS mean that employers are still obliged to establish whether they can continue to pay just over a fifth of usual employees for workers they wish to keep on.
At the time, some business groups and unions criticised the idea of forcing employers to calculate which jobs were “viable”.