COVID-19 causes psychological distress and anxiety due to fear of infection and the possibility of worsening symptoms leading to mortality. Public health measures like contact tracing and lockdowns further increase the panic among infected patients and the public. We intended to assess the effect of telecounseling in reducing anxiety in patients admitted to isolation wards. In this multi-center observational study, we administered a Generalized Anxiety Disorder-7 (GAD-7) scale before and after telecounseling. The study group consisted of participants who gave consent for telecounseling, and those who did not give consent constituted the control group. The telecounseling was based on the Psychological First Aid model, due to its simplicity. There was a statistically significant decrease in anxiety after telecounseling in the study group (P value ≤ 0.001, effect size = 0.484). There was a statistically significant decrease in anxiety in the study group compared to the control group (P value ≤ 0.001). Telecounseling contributed to the reduction in anxiety in COVID-19 patients in isolation wards. Several other factors like severity of the infection, comorbid medical illness, pre-existing mental health issues, individual's level of coping with stress, and duration and place of admission may have affected the anxiety levels in the patients.