Public Health England said that coronavirus variant B.1.617.2, which was first identified in India, would be classified as a variant of concern due to evidence it was more transmissible.
It said that the other characteristics of the variant were still being investigated.
"There is currently insufficient evidence to indicate that any of the variants recently detected in India cause more severe disease or render the vaccines currently deployed any less effective," PHE said in a statement.
British Prime Minister Boris Johnson said the government needed to handle carefully the emergence of the variant.
"I think we've got to be very careful about that. We're doing a huge amount, obviously, to make sure that when we do find outbreaks of the Indian variant that we do surge testing, that we do door-to-door testing," he told reporters.
The variant, previously known as B.1.6172, has been reclassified as VOC-21APR-02, PHE said.
PHE health protection teams are working with local authorities, public health officials and NHS Test and Trace to detect cases and limit onward spread.
Surge testing will be deployed where there is evidence of community transmission, PHE added.
Dr Susan Hopkins, Covid-19 Strategic Response Director at PHE said: "We are monitoring all of these variants extremely closely and have taken the decision to classify this as a variant of concern because the indications are that this VOC-21APR-02 is a more transmissible variant."
According to Deputy Chief Medical Officer Dr Ronan Glynn there have been 20 cases of the B.1.6172 identified in Ireland.
He said a lot of that remains unclear in relation to variants and we we need to monitor and look at the evidence on impact of vaccination effectiveness, impact on severity and mortality.