James Purnell says the government will give support to those looking for work
Benefit claimants, including single mothers, will have to "play their part" in the economy or face losing some state payments, the government says.
People will be asked to do some form of work or prepare themselves to find work in future, under plans unveiled later.
Minister James Purnell said it would "transform lives" and said public money should not be wasted "on people who are playing the system".
The Tories say Labour has had 11 years to make changes to the benefit system.
Work and Pensions Secretary Mr Purnell is expected to make a Commons statement at 1230 GMT on a welfare reform white paper - the final stage before proposals are introduced in the form of a bill.
It looks set to incorporate many of the recommendations of last week's Gregg Review, which recommended everyone on benefits, apart from the severely ill or disabled, some carers and parents of children under one, should either be actively looking for or preparing themselves for work.
What makes the proposals really significant is that they represent a consensus between the Labour and Tory leaderships
The government's plans - which are likely to be resisted by some Labour MPs - are expected to include penalties for people who turn down reasonable job offers or interviews.
Mr Purnell told BBC Radio 4's Today programme said the white paper was based on the Gregg review and last year's review by David Freud who said private and voluntary groups should be paid to help get people back to work.
He said the government agreed that "virtually everyone has to do something in return for their benefits".
He said the reforms would start to "turn around some of the scars in our communities".
There was a consensus, he said, that work was "good for people" and leaving people on benefits was "actually the cruel thing to do because it's bad for them and bad for their families".
Support was available for those who wanted to find work but for the "very small group of repeat offenders" would face "clear financial sanctions" where appropriate.
People's views on benefits reform
Those with children were more likely to be penalised "in terms of their time so requiring them to come in and do more in return for their benefits", Mr Purnell said.
"If there's work there for people, we believe they should do it and people should not be able to turn down a reasonable offer of a job."
Making people "live up to their obligations" had always been at the heart of the welfare state since it was created, said Mr Purnell, who claimed Labour MPs had come to him to "ask me to do this".
'Dismantling welfare state'
"We can't afford to waste taxpayers' money on people who are playing the system, but most of all we can't afford to waste people's talent and that's why we need a welfare state that is active and helps people back into work."
The Conservatives are likely to support the proposals as they say they suggested them almost a year ago.
But the government faces opposition from Labour backbenchers like John McDonnell who said the government was "dismantling the welfare state".
He said at a time of acute economic insecurity, the government had "got its priorities wrong".
"It is lunacy to force people into jobs that are not there and to force lone parents to take up childcare which is either unaffordable or non-existent," he said.
For the Conservatives, shadow work and pensions secretary Chris Grayling said: "Britain is now a country where it is more and more difficult for young people to do better than their parents did.
"Worse still, we have generations of the same family trapped in a dependency culture."
"For 10 years the government has been telling us it has the policies to solve the problem. But it hasn't worked. Britain really now needs a fresh direction," he added.
Ministers have made welfare reform a centrepiece of their legislative proposals over the next year, arguing that to abandon such a course of action in the face of a recession would be wrong.
A recent government-commissioned report argued that people should have their benefits cut for four weeks if they repeatedly refused to make efforts to find work.
But charities are concerned that excessive pressure on single parents to find work would be damaging.
"The government's get-tough approach inappropriately puts sensitive decisions about parenting and children's needs in the hands of job centre officials," said Fiona Weir, of pressure group One Parent Families Gingerbread.
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