The exemption is being introduced from today in an attempt to relieve pressure on the NHS amid hundreds of thousands of people every week being told that they should stay home after being in contact with somebody that tested positive for Covid-19.
The move will apply to front-line staff only whose absence would may cause "a significant risk of harm!, and will depend on them having a negative PCR test alongside testing daily with lateral flow devices.
Decisions should be taken on a case by case basis and after a risk assessment has been made and approved by bosses, according to the DHSC.
Health Secretary Sajid Javid said "it's important that we ensure frontline staff can keep providing the best possible care and support to people up and down the country."
He added: "The government has backed healthcare services at every turn through this global pandemic and these new rules will fortify our collective defences against this awful virus, by allowing fully vaccinated frontline NHS and social care staff to continue to work when needed.”
The news comes less than a day after there was furious backlash to the Prime Minister's and Chancellor's involvement in a pilot which would have seen them be able to avoid self-isolation, despite being a confirmed close contact of somebody who has tested positive.
It took less than three hours on Sunday for the decision to involve Boris Johnson and Rishi Sunak in the pilot to be reversed.
Over the weekend businesses warned of shortages on the shelves as the number of people off work after being pinged by the NHS Covid app continues to rise.
With growing reports of disruption to supply chains, public transport and the NHS, CBI president Lord Bilimora called for an immediate end to the requirement to self-isolate for people who have been fully vaccinated.