The First Minister warned of “difficult judgements” ahead, with restrictions to now be kept under daily review amid concerns over the "rapid" rise of the new Omicron variant.
She urged people to take a lateral flow test every time they visit pubs, restaurants or mix with others over the festive season.
There are now 99 confirmed cases of the Omicron variant in Scotland, up 28 on the day before.
Ms Sturgeon said there had been a tenfold increase in the space of a week, while around 4 per cent of Covid cases in Scotland are likely to be the Omicron variant.
Scotland is currently recording just over 2,800 new Covid cases a day on average, with cases rising by 11 per cent in the past week.
However, the number of people in hospital and intensive care has fallen.
The First Minister said the emergence of the Omicron variant is now “an additional – and very significant – cause for concern”.
Speaking in Holyrood, she said: “We already advise people to work from home where practical.
“Today, I am asking employers to ensure this is happening.
“To be blunt, if you had staff working from home at the start of the pandemic, please now enable them to do so again.
“We are asking you to do this from now until the middle of January when we will review this advice again.
"I know this is difficult, but I cannot stress enough how much difference we think this could make in helping stem transmission and avoid the need for even more onerous measures.”
Ms Sturgeon said restrictions would remain unchanged for now, but further measures, such as an extension to vaccine passports, could not be ruled out.
She said testing regularly with lateral flow devices was “essential”.
Ms Sturgeon added: “We are asking everyone to do a lateral flow test before mixing with people from other household – and on every occasion they intend doing so.
“That means before going to a pub, restaurant, visiting someone’s house or even going shopping.
“I am not excluding myself from this. I am currently doing a test every morning before coming to work and I will do a test on any occasion I mix with others over the festive period.
"And I will ask anyone visiting my home over Christmas to do likewise.”
The First Minister said data suggested Omicron was more transmissible than the Delta variant, “perhaps significantly so”.
There are also concerns it “may evade to some extent the immunity conferred by vaccinations”, she said.
It came after Prime Minister Boris Johnson also told his Cabinet that early indications suggest Omicron is more transmissible.
However, Ms Sturgeon stressed getting vaccinated would still be vitally important.
She said: “For the Scottish Government, our first principle will be to seek to do what is necessary to keep the country as safe as possible, even if that is at the expense of being popular.”
Ms Sturgeon said the doubling time for Omicron cases was estimated to be as short as two to three days, with confirmed cases in nine out of Scotland’s 14 health board areas.
She said: “Our health protection teams are working hard through contact tracing, testing and isolation to slow the spread of Omicron cases and I want to thank them for the excellent work they are doing.
“However, given the nature of transmission, I would expect to see a continued and potentially rapid rise in cases in the days ahead and for Omicron to account for a rising share of overall cases.
“All of this explains, I hope, the requirement for government to review the situation on a daily rather than a weekly basis at this stage.”
Scottish Conservative leader Douglas Ross said the SNP had failed to do enough to prevent an escalating crisis in the NHS.
Scottish Labour leader Anas Sarwar said there were thousands of vacancies in the health service and the worst accident-and-emergency waiting times on record.
He called for detailed updates on the steps being taken to address "these emergency issues".
David Lonsdale, director of the Scottish Retail Consortium, said: “We fully support the effort to get on top of the public health situation.
"Retailers are playing their part, investing significantly to make their stores as Covid-secure as they can be for customers and for staff and continuing to go above and beyond the baseline Covid measures.
"However, it is inevitable that any move to greater home working will impact on shopper footfall for some stores, especially in our city centres and in the lead up to Christmas.
"Many of these consumer-facing businesses are still trying to find their feet after the past 20 months of the pandemic.”
Scotland’s national clinical director Jason Leitch had earlier said locations were likely to be closed due to the Omicron variant before Christmas.
Professor Leitch made the claim after staffing worries caused the closure of Todholm Primary School in Paisley for week on Monday due to a number of workers being forced to isolate.
He said on Tuesday there would likely be more closures, but they would not necessarily be restricted to educational settings.
“I’m expecting there to potentially be other location closures before Christmas,” he told BBC Radio Scotland.
“That’s random – it might be a school, might be a call centre, might be my office, might be yours.
“It depends where Omicron appears.”
While Prof Leitch said the new variant remained sparse in Scotland and the Delta variant was still more concerning, the national clinical director described Omicron as an “unknown”.
“We don’t know if it gives you a worse disease or if it somehow evades the vaccine a little,” he said.
“And therefore, health protection teams are being much more cautious with it.”
Prof Leitch also said children should be regularly tested for the virus using lateral flow devices.
“We should certainly be testing them regularly, we don’t need to test children every single day,” he said.
“Two or three times a week seems reasonable for children.”
However, the clinician did urged Scots not to use lateral flow tests within 90 days of having Covid-19, for fear of false positives.
Latest figures appear to show vaccine hesitancy among young people, but Prof Leitch warned against “condemning” those who are unvaccinated.
According to the Scottish Government, just 70.2 per cent of those between 18 and 29 had received both doses, along with 78.4% of those between 30 and 39.
Prof Leitch said: “The way to get through to younger people and older people who need to come for their boosters is to persuade them, not to condemn them or suggest they’re causing the outbreaks.
“That doesn’t work – what works is giving people the right information at the right time.”