Silverstone will be allowed to have a capacity crowd for the British Grand Prix on 18 July.
The track can hold about 140,000 spectators, which will make it the largest crowd for a sporting event in the UK since the start of the coronavirus pandemic.
Lewis Hamilton said he was excited about the news but worried about the rise in Covid-19 cases in the UK.
“The selfish side of me wants to see all these people here,” he said.
“I like to err on the side of caution and slowly build up, rather than go full pelt and using our British fans as a test.”
All adults attending will have to be fully vaccinated or be in possession of a negative test for Covid. The rules for children have not yet been revealed.
The UK has experienced a rise in cases in recent days as a result of the rise of a more infectious Covid variant known as “delta” – 16,135 new cases were recorded on Wednesday.
Britain’s Hamilton, the seven-time world champion, added: “I don’t want to turn it into a negative. I am excited to see so many people.
“But I turned on the news this morning and have been watching it these past days and I know that UK rates have increased since people are loosening up a little and not everyone is vaccinated and I do worry about people.
“But I read that the vaccination is good, there are fewer people in hospital.
“It feels a bit premature to me, but it’s not my place. I hope we learn something from it and I hope everyone stays safe, keeps their mask on.
“I”m not in politics, and I’m not in government. There has been lots of confusing things coming from government over time and I don’t understand it all.”
F1 president Stefano Domenicali said the development was “fantastic news”.
The move follows large crowds being permitted for the final matches of Euro 2020, as well as Wimbledon and the Open golf tournament.
Capacity at Wembley will be raised to 60,000 fans for the semi-finals and final of Euro 2020, Wimbledon will start at 50% capacity on 28 June before rising to a full 15,000 capacity for the men’s and women’s finals, while 32,000 spectators a day will be permitted at the Open.
UK Culture Secretary Oliver Dowden said: “Through our successful vaccine rollout and ambitious Events Research Programme, we are continuing to make progress, and events like this will pave the way for everyone to enjoy live sport and culture together safely once more.”
Silverstone managing director Stuart Pringle said: “This is something we have all been working towards for months and I cannot wait to welcome a full capacity crowd back to Silverstone this July.
“Many of our fans rolled their tickets over from 2020 but they are now well placed to enjoy what is sure to be one of the highlights of the summer.”
Pringle thanked the government for “recognising what an amazing, safe opportunity the British Grand Prix offers to show the world how Britain has dragged itself back on track following the fight against the pandemic”.
Changes planned for Abu Dhabi Grand Prix
Meanwhile, Abu Dhabi’s Yas Marina circuit will be changed before this year’s Formula 1 season finale in an attempt to increase overtaking opportunities.
The track has been criticised for producing dull races, because overtaking is so difficult at the purpose-built track, which made its debut on the calendar in 2009.
The circuit will be modified in three areas in an attempt to enable cars to follow each other more closely.
The chicane at Turns Five and Six will be removed and the Turn Seven hairpin on to the first long straight will be widened.
The four right-angled corners at Turns 11 to 14 will be replaced by one long banked corner.
And the radius of Turns 17, 18, 19 and 20 will be opened to create what F1 hopes will be “a faster, flowing section of the track”.
