Unlike other countries that have imposed strict lockdowns on shops, bars, restaurants and gyms, Sweden has kept similar facilities open throughout the pandemic in an approach aimed to create "herd immunity" in the population.
"There should be no social situations with more than eight people, even if they are not formally covered by the law," Löfven said at a press conference.
"This is the new norm for the whole of society and the whole of Sweden. Do not go to the gym, do not go to the library, do not have dinner parties, do not have parties. Just cancel it."
The new limit will come into force on November 24 and is initially expected to apply for four weeks, but in a press release the government said it was ready to extend the recommendation over Christmas and the new year if necessary.
Löfven said that adherence to the new restrictions was essential if the current surge in infections was to be brought under control."This is going to get worse," he said.
"Do your duty, take your responsibility to stop the spread."
The number of people testing positive in Sweden hit a new daily record of 5990 new cases on Friday, with the number of positive diagnoses rising by about 50 per cent a week.
The country's public health agency began rolling out "general local recommendations" to the most hard-hit regions from the middle of last month, but Lena Hallengren, Sweden's health minister, said that the recommendations, which were far-reaching but not backed by law, had not been sufficiently widely followed.
"Over recent weeks, the recommendations have been sharpened and strong measures have been taken. Despite this, behaviour has not yet changed enough to turn the direction of the development," she said.
"The curves are still going in the wrong direction."
The new measures should not be interpreted as being the beginning of a hard lockdown of the sort in place in Britain and several other European countries, Löfven said.
"We do not believe in a total lockdown, we believe that the measures are putting in place are the right ones," he said.