Employee "fit notes" are to be brought in as part of government efforts to cut the amount of money lost to the economy from workplace absenteeism.
The idea is for GPs in England to spell out those tasks workers can perform rather than the traditional "sick note" focusing on what they cannot do.
There will also be more support to help people back to work with firms encouraged to promote healthier living.
A report in March warned ill-health was costing the economy £100bn a year.
Returning to work
Ministers have accepted recommendations made by government health advisor Dame Carol Black that the system of GPs issuing sick notes, in place since 1948, should be overhauled.
Trials replacing paper notes with electronic fit notes are underway and, if successful, the new system could be in place by 2010.
The new fit notes, outlining what duties an employee could do, would be passed on to employers if he or she agreed.
It is hoped this would leave managers better informed about their workers' needs and able to discuss ways of keeping them in work such as changing their working hours or altering their duties.
The notes are intended to form part of a package of support to help staff with problems stay in work and to return to the workplace as soon as possible.
Dame Carol's report highlighted the impact on economic productivity of improving occupational health and reducing the number of people, more than 2.7 million of whom, are on incapacity benefits.
Unions have long complained that there is insufficient support for people unable to work due to sickness or injury.
Health Secretary Alan Johnson, who has also announced a review of the health of NHS workers, said he wanted to help encourage people off work to return as "soon as possible".
"Helping people stay in work doesn't just have an economic imperative," he said.
"It has a moral and social one too. Poor health can prevent people fulfilling their potential, leaving them more likely to slip into poverty and social exclusion."
A GP has the power to sign someone off work for six months before the case is passed onto a benefits administrator.
But some GPs have been frustrated with the current system because they are unable to assess what work an employee can do if they do not know what their workplace responsibilities are.
About 350,000 people a year transfer from sick notes to benefits, a figure which experts believe could be cut significantly with earlier and more effective intervention.
However, some GPs are concerned that their independence may be threatened.
Dr Laurence Buckman, chairman of the British Medical Association's GP Committee, said: "The new fit note has potential but we would like to see the findings of this evaluation because it's crucial GPs can continue to act as the patient's advocate and don't end up policing the system for the Department for Work and Pensions."
Other proposals include a pilot scheme for those newly off sick to be allocated a case manager to tailor a back-to-work programme for them with the help of physios, counsellors and other health professionals.
Health experts could also be present at job centres in the future to assess the needs and problems of job applicants - and employment advisors in GP surgeries.
Dame Carol said attitudes to sickness among employers, especially regarding mental health problems, needed to change if progress was to be made.
"We have to make an employer believe that if he invests in the health and wellbeing of his staff, it will meet his bottom line," she said.
Liberal Democrat health spokesman Norman Lamb said: "This is a serious issue which deserves a sophisticated approach, but we must be wary of moving to a system where doctors find themselves policing the benefits system rather than treating the sick."
For the Conservatives, Chris Grayling said: "The government has had 10 years to address these sorts of problems but has done nothing. So why should we believe them that this is going to make a difference?"
Business groups said the interests of employers and their workers should be aligned when it came to improving occupational health.
But unions said the proposals did not go far enough in assisting people or improving how safety and health risks are managed and policed in the workplace.
"Workers made ill by their jobs need early access to rehabilitation and better support to help them get back to work as soon as they are able to," said TUC general secretary Brendan Barber.