Many people would like to work beyond the default retirement age
A review of the default retirement age, which allows employers to compel staff to retire at 65, is to be brought forward by a year, the government says.
BBC home editor Mark Easton said ministers had effectively signalled an end to the default retirement age.
The majority of people retire before 65, but 1.3 million people work beyond state pension age. Many more say they would if their employer permitted it.
The employers group the CBI said the move was "disappointing".
The review had been expected in 2011 but will now take place next year.
Ministers said they had brought the review forward to respond to changing demographic and economic circumstances.
Explaining the change in the timing of the review, Prime Minister Gordon Brown said: "Evidence suggests that allowing older people to continue working, unfettered by negative views about ageing, could be a big factor in the success of Britain's businesses and our future economic growth."
The TUC welcomed the move, with general secretary Brendan Barder saying: "It cannot be right that an employer can sack someone simply for being too old.
"Employees should have choice - neither forced by employers to give up work, nor forced by inadequate pensions into working longer than they should."
However the business group, the CBI, said: "Having a default retirement age helps staff begin the process of deciding when it is right to retire, and helps firms plan ahead with more confidence."
It added that its research had suggested that 81% of those who asked their employer to keep working had been allowed to do so.
Pensions Minister Angela Eagle said both employers and employees would be asked their views.
"Our own research shows that many more people wish to work a little bit beyond retirement, and perhaps wind down their working lives rather than have them abruptly cut off, and I think that as a society that's something that we need to consider," she said.
Separately, the Court of Appeal will hear a legal challenge to the default retirement age this week in a case backed by the Equality and Human Rights Commission.
A solicitor, Leslie Seldon, believes he was discriminated against on the grounds of age when he was not permitted to work beyond the age of 65. He says he needed to go on working to support his family.
Dinah Rose QC, acting for the Department for Business, Innovation and Skills, says the hearing will raise "important questions of policy and principle".
A number of age discrimination cases are waiting in the pipeline for the outcome of this and another challenge being brought against the government by the charity Help the Aged and Age Concern next week.
The organisation welcomed the news, but said it would still press ahead with its planned judicial review of the original legislation, adding that many older people wanted to work past the age of 65.
"The workforce is changing very rapidly, there are fewer school leavers coming into the labour market, and more people in their fifties and sixties," said the charity's Andrew Harrop.
"We all know about the problems this country faces with pensions, and the best way of solving that is to encourage people to work a few years longer. It's good news for employers and for the economy, for people to stay on in work into their sixties."
The Liberal Democrats said that the default retirement age should be scrapped as soon as possible, saying that making it illegal to discriminate against someone because of their age, except if they were over 65, was "typical new Labour fudge".
"Ageism needs to be stopped, full stop," said Work and Pensions spokesman Steve Webb.