Nearly 60% of England will be under Tier 2 restrictions when a national lockdown lifts on Wednesday. Under these, pubs can only serve alcohol with a substantial meal, effectively keeping those that do not serve food in lockdown.
Prime Minister Boris Johnson announced that pubs in England that do not serve food would receive the payment in December in recognition of the hit they will take in what is usually their busiest month.
Keir Starmer, the leader of the opposition Labour Party, described the 1,000 pound payment as "the definition of small beer". Hospitality sector leaders were also critical.
"It's outrageous you can have a pint in a theatre, concert hall, cinema or sports ground without a substantial meal, but not the pub. It is a slap in the face of pubs and brewers," said Emma McClarkin, Chief Executive of the British Beer & Pub Association.
"If the Government isn't going to do this, then it must provide far greater support."
Chairman of pub chain JD Wetherspoon Tim Martin said that with nearly all of England in Tier 2 or the tougher Tier 3, which only allows takeaway food, the system effectively closed all pubs in England.
Nearly 21,000 pubs which will be under Tier 2, figures from real estate adviser Altus Group said. It did not say how many of the pubs were so-called "wet" pubs.
Kate Nicholls, chief executive of UKHospitality, said that the system would make nine out of 10 hospitality businesses unviable by the new year.
"A one-off payment of 1,000 pounds for pubs forced to close does not even count as a token gesture," she said.
The rules have sparked confusion over what constitutes a substantial meal, with attention focused on the status of the Scotch Egg - a delicacy consisting of an egg wrapped in meat and breadcrumbs.
After some debate over whether it was a meal, a starter or a bar snack, senior minister Michael Gove said told ITV it was a substantial meal and said "I myself would definitely scoff a couple of Scotch Eggs if I had the chance".
He had earlier told LBC radio that a "couple of Scotch Eggs is a starter, as far as I'm concerned".
Scotland, Wales and Northern Ireland have their own rules on coronavirus restrictions. Welsh pubs will not be able to serve alcohol at all from Friday.
($1 = 0.75 pounds)
(Reporting by Paul Sandle, Alistair Smout and William James; Editing by Angus MacSwan)
By Paul Sandle and Alistair Smout