The Tories say more radical ideas are needed to help people find work
The Tories have stepped up their attack on Labour's employment record, accusing them of leaving people trapped in a "vicious cycle" of welfare dependency.
Shadow work secretary Theresa May said unemployment had become entrenched in many families with dire social effects.
Figures released on Wednesday showed the number of UK households with no-one working has risen to a 10-year high.
Labour said the Tories' failure to help the unemployed in the 1980s had left a disastrous legacy.
The Tories argue the impact of the recession on unemployment, which is predicted to reach three million, shows the government failed to reform the welfare system during better economic times.
In a speech, Ms May pointed to what the Tories describe as the financial and human cost of a culture of "worklessness" in many communities.
The cost to the state of paying benefits - such as housing, income, council tax and incapacity support - to those not working has reached £346bn since 1997, she claimed.
But the social impact on children growing up in workless families was more alarming, she said, as they were more likely to fail at school, become involved in crime, become addicted to drink and drugs and end up unemployed.
Many people were now stuck in a "vicious cycle" where "they can't imagine getting a job" and "don't know anyone else with a job".
"Worklessness has become a generational problem - passed from father to son, mother to daughter," she said.
"Recession or no recession, it makes no difference to their lives. They have been trapped on benefits for as long as they can remember and they can't see any chance of getting out."
The number of households in which no-one over the age of 16 has a job rose by 240,000 to 3.3 million in the year to June, official figures show.
They include early retirees, full-time students and those on disability benefit who are not included in official unemployment statistics.
Ministers unveiled plans to shake up of the benefits system earlier this year which would require nearly everyone except single parents with very young children and the severely disabled to prepare for work or face potential penalties. They hope to get one million people off incapacity benefit by 2015.
Ms May said the proposals were not radical enough and said the Tories were committed to reassessing all existing incapacity benefits claimants.
The Tories want a bigger role for private firms and voluntary organisations to provide advice and support to the long-term unemployed.
Ministers criticised the Conservatives' record in government during the 1980s and 1990s.
"Labour's programme of welfare reform cut the number of people on incapacity benefit after they trebled between 1980 and 2000 as a result of Tory policies," employment minister Jim Knight said.
"If Theresa May wants to get serious about tackling worklessness she should stop opposing our £5bn programme to deliver real jobs and help people into work.
"Just as the Tories turned their backs on people in the last recessions - so too today they oppose Labour's investment to help people now when they most need it."