In Leicester, non-essential shops have been ordered to close from Tuesday, schools from Thursday, while the city's 330,000 citizens have been asked to remain indoors as much as possible, Xinhua news agency reported.
The easing of lockdowns across England will begin from July 4, while the restrictions imposed in Leicester will be reviewed in two weeks, Hancock told MPs in the House of Commons on Monday.
He said that controls will only remain as long as is necessary in the city.
Hancock also said people in the city and some of its surrounding communities must get tested if they display any symptoms of the virus.
The Secretary said that the number of positive new cases across the UK is now below 1,000 a day.
He said the seven-day infection rate in Leicester is 135 cases per 100,000 people, which is three times higher than the next highest city.
"Leicester accounts for around 10 per cent of all positive cases in the country over the past week," said Hancock.
Following an emergency meeting with local officials in the city, which is just over 160 km north of London, further measures to tackle the outbreak in Leicester were agreed.
"Given the growing outbreak in Leicester, we cannot recommend that the easing of the national lockdown, set to take place on the July 4, happens in Leicester," Hancock told politicians.
Special laws will be introduced quickly to allow the local lockdown measures, he said.
"We recommend to people in Leicester, stay at home as much as you can and we recommend against all but essential travel to, from and within Leicester," Hancock said.
He added adherence to social distancing rules will be closely monitored, with further steps taken if that is what's necessary.
The UK has so far reported a total of 313,470 COVID-19 cases, with 43,659 deaths.