Schools and universities will be closed, except for those sitting for international exams, though childcare centres and kindergartens will be allowed to open.
Malaysia's economy declined 5.6% in 2020, its worst performance since a 7.4% fall in 1998, owing partly to strict movement curbs aimed at halting the COVID-19 spread.
Muhyiddin said the government would roll out 20 billion ringgit ($4.86 billion) of stimulus packages, including a 11 billion ringgit fiscal injection.
Malaysia's cabinet has also agreed to prepare a special injury scheme to compensate people who experience serious side-effects after receiving the vaccine, Khairy added.
The Southeast Asian nation has seen a spike in infections since September, with the number of daily reported cases climbing to record highs on two days this week.
The government has said it was considering imposing targeted lockdowns in some areas.
Muhyiddin had also avoided a potential political crisis last month, after the opposition backed down from a plan to vote down the budget at the end of the policy stage debate.
Muhyiddin said he met UMNO President Ahmad Zahid Hamidi this week and they agreed to mend ties between their parties and avoid competing against each other when an election is called.
Pfizer has agreed to deliver the first one million doses in the first quarter of 2021, with 1.7 million doses, 5.8 million and 4.3 million to follow in subsequent quarters, Muhyiddin said.
The Southeast Asian country has seen a steady climb in cases in the past week in the aftermath of an election in the state of Sabah in Borneo on Sept 26.
While Anwar's own party is a relatively minor player in the Sabah election, a regional party friendly to his Pakatan Harapan bloc will be the obstacle to Muhyiddin's allies.