Home Secretary David Blunkett says he wants to make the UK "one of the most difficult environments in the world" for organised crime.
Drug trafficking is now international big business
He has outlined new powers to be given to an elite FBI-style police force in a drive against the problem.
"Organised crime is big business, it costs around £40bn a year. Its effects are corrosive," he told MPs.
His plans include a national witness protection scheme to encourage people to inform on "Mr Bigs".
They were welcomed by shadow home secretary David Davis, who said the proposals must be subjected to "very vigorous scrutiny".
Liberal Democrat home affairs spokesman Mark Oaten said his party
"accepted most" of the measures - adding that they were necessary to deal with
an "unideal world".
The plans also suggest phone tap evidence could be used in court, but Mr Blunkett said these would need "rigid safeguards".
The home secretary would "personally" have to approve agencies' rights to go ahead with them, he said.
The Serious and Organised Crime Agency (SOCA) is being set up to target organised gangs and crime chiefs.
It will bring together the responsibilities of the National Criminal Intelligence Service, the National Crime Squad, parts of the Immigration Service and of Customs and Excise, Mr Blunkett told MPs.
He said organised crime "exploits every modern technology" and he was setting out clear objectives for reducing the scourge.
The Serious Fraud Office will be given powers to compel production of documents
and information, plea bargaining will be put on a statutory footing and a
national witness protection programme will be taken forward.
Jan Berry, chairman of the Police Federation, told Radio 4's Today programme "supergrasses" should be encouraged to come forward, but that the victim must be seen to be given priority in any prosecution.
The white paper, which lays the foundations for future legislation, is entitled One Step Ahead: A 21st Century Strategy to Defeat Organised Criminals.
The security services MI5, MI6 and government listening post GCHQ are said to have reservations about allowing the use of surveillance material in court, fearing it will expose their techniques.
Blunkett: May be opposed by civil liberties groups
Mr Blunkett told BBC Radio 4's Today programme he had changed his mind on the issue because he believed the shift could be made without damaging Britain's intelligence services.
He argued that plea bargains, where informers get shorter sentences for information on gang bosses, already happened surreptitiously in Britain and should now be formalised.
The home secretary denied such deals were insulting to victims and their families and said they worked effectively in countries like America.
"Every means at our disposal should be examined in order to get what is now an international cross-boundary scourge tackled with the same tools as the people doing it are using against us," he said.
In Merseyside, 70-80% of organised crime cases collapse and organised crime nationwide was now worth £40bn a year - equivalent to the GDP of New Zealand, suggested Mr Blunkett.
The white paper also suggests forcing associates such as lawyers, bankers and accountants - who are normally bound by confidentiality rules - to disclose information about gangster clients.
SOCA will be an elite new law enforcement agency with about 5,000 investigators specialising in drug trafficking, people smuggling and fraud cases.
Its creation will be the biggest shake-up of the way British policing is organised since force boundaries in England and Wales were re-drawn 40 years ago.
SOCA will require legislation following the white paper and is expected to be operational by 2006.
The white paper says just 1% of Customs defendants gave evidence in exchange for leniency last year, compared with 15% of similar defendants in Australia and 26% in the United States.
Mr Blunkett has acknowledged he could face criticism from civil rights groups.
But Shami Chakrabati, director of the human rights group Liberty, welcomed the phone tap evidence proposal.
"We will have a look at the detail or the proposals," she said. "We will hope it is light on the gimmick and strong on the constructive ideas."
Paul Stevenson, chairman of the Association of Chief Police Officers, welcomed the SOCA plans.
"What the new agency will be able to do is bring a new focus to bear but it will not replace what's already in existence," he told BBC News 24.
Using phone tap evidence did have benefits, he said, but there were worries that sensitive techniques could be revealed to criminals.