Most cases of infection with the coronavirus are asymptomatic or mild with no special treatment required, the National Health Commission said in a statement on Wednesday.
"Asymptomatic persons and mild cases can be isolated at home while strengthening health monitoring, and they can transfer to designated hospitals for treatment in a timely manner if their condition worsens," the NHC said.
The pandemic erupted in the central Chinese city of Wuhan in late 2019.
For nearly three years, China has managed Covid as a dangerous disease on a par with bubonic plague and cholera, but since last week, top officials have acknowledged the reduced ability of the virus to cause disease while some Chinese experts suggested it is no more deadly than seasonal influenza.
The change in the quarantine protocols reflects adjustments in prevention and control measures according to the characteristics of virus mutations, the NHC said.
Home isolation for the infected marks a significant change in the rules.
Earlier in the year, whole communities were locked down, sometimes for weeks, after even just one positive case was found. Cities across China were gripped by protests over tough Covid policies late last month, in what was the biggest show of public discontent since Xi Jinping came to power in 2012.
High-risk areas should be accurately defined by building, unit, floor and household, and must not be arbitrarily expanded to entire residential compounds and communities, the NHC said on Wednesday.
The health authority urged localities to "resolutely rectify simplified, one-size-fits-all, and adding extra measures" for Covid prevention and to reject and overcome "formalism and bureaucracy".
The NHC listed a total of 10 new guidelines, which followed 20 measures released on November 11 aimed at "optimising" Covid prevention and control protocols.
The latest version of the protocols - published in late June - was based on preventing the import of infections from overseas and curbing domestic rebounds while "dynamically" bringing cases down to zero as and when they emerge.
While the NHC on Wednesday did not mention the zero-tolerance approach to Covid, it said the last edition of the epidemic control protocols should be adhered to while implementing the latest measures and guidelines.
While protests petered out in days amid a heavy police presence, cities and regions around the country started announcing a mish-mash of easing measures last month. Many of the steps taken by individual cities or regions were reflected in the list of policy changes issued by the National Health Authority on Wednesday.
But the looser curbs have set off a rush for preventative drugs as some residents, particularly the unvaccinated elderly, feel more vulnerable to the virus.
Authorities across the country have warned of tight supplies and price gouging from retailers in recent days.
"Please buy rationally, buy on demand, and do not blindly stock up," the Beijing Municipal Food and Drug Administration was quoted as saying in the state-owned Beijing Evening News.
In Beijing's upmarket Chaoyang district, home to most foreign embassies as well entertainment venues and corporate headquarters, shops were fast running out of some those drugs, according to a resident.
"Last night the medicines were already in stock, and now many of them are out of stock," said Zhang, a 33-year-old educationist, who only gave his surname.
"Epidemic preventions have been lifted...Covid-19 testing sites are mostly being dismantled... So, because right now in Chaoyang district cases are quite high, it is better to stock up on some medicines," he said.
