Private firms and voluntary groups should run schemes to get people off welfare benefits and into work, a report will say.
The government-commissioned paper is expected to outline a major overhaul of welfare to work services on Monday.
This may include forcing more single parents to return to work.
Work and Pensions Secretary John Hutton has also warned that claimants' benefits could be reduced or withdrawn as a "last resort".
Mr Hutton told BBC One's Sunday AM he was prepared to cut the benefits of people who did not seek help or accept advice about finding work.
"The status quo, I think, is not defensible.
"We should be prepared to have an open mind about reform, but it will not be based on the principle that the first thing you do is cut people's benefits.
"You should never do that - that's the last resort."
He added: "What we should do is provide active help and support to get these people back to the labour market."
The report, written by former city banker David Freud, is due to be unveiled on Monday by Tony Blair, Gordon Brown and Mr Hutton.
Mr Freud was called in to reduce the number of people of working age on benefits, for which they do not have to be actively seeking work.
His report is expected to say that organisations running the schemes should be given cash incentives for keeping people off benefits.
Mr Hutton said a proposal to privatise help for the unemployed could sit alongside the existing system for getting people into work - Job Centre Plus.
He also did not rule out suggestions that money could also be made available to help the long-term unemployed buy a suit or get a haircut in preparation for their job hunt.
"For a lot of people it is about confidence building and sometimes, if you want to present yourself well at an interview, you've got to look the part," he said.
Other issues the report is expected to raise include considering giving people help to pay off debts they have accrued while on benefits, and tackling the problem of people doing short spells of work and then having longer periods on benefit.
Welfare reform expert Professor Alan Marsh, of the Policy Studies Institute, told BBC Radio Five Live there were already incentives for people to work.
"We've been increasing incentives, year on year, for the last 10, 15 years," he said.
"People have been given increasing tax credits to go into work. Some people who go into work - particularly those with children - are getting more in cash incentives from the government than they get in wages from their new employer."
Making single parents go to work once their youngest child reached 11 was another debate likely to be raised.
"If you are a lone parent, the system does not expect you to take any active steps to get back to work until your youngest child is 16," Mr Hutton said.
However Chris Pond, director of the group One Parent Families, told the BBC he thought forcing single parents into work was a bad idea.
"It would be a real mistake to start cajoling lone parents, even those with older children, into jobs when it's just not right for them," he said.
"Most lone parents with older children are already working. About 70% already have a job. Those who are not working very often have good reasons for not doing so."
Kate Green, chief executive of the Child Poverty Action Group, said policies should not just be about getting people jobs, but getting them the right sort of jobs.
"Around half of children who are poor are in families where there is at least one adult in paid work, so I think it's very important to make sure that, if we're talking about more parents going out to work, that really it is the kind of work that can enable them properly to provide for their kids."