Imminent spending cuts will be "painful and controversial", Deputy Prime Minister Nick Clegg has admitted.
Ahead of Monday's announcement of the details of £6bn in cuts this year, Mr Clegg said the squeeze was necessary to "bring sense" to the public finances.
He said the coalition government would have to "hold its nerve" over tough decisions and attacked what he said had been irresponsible spending by Labour.
The BBC has learned the business department's budget will fall by £700m.
The BBC's Political Correspondent Carole Walker said a further £500m would come from trimming or axing public bodies.
Ministers say cuts must be made quickly to show Britain is serious about cutting the deficit but Labour says this could put the recovery at risk.
"These are difficult decisions," Mr Clegg told BBC One's Andrew Marr show.
"No-one went into politics to seek to deliver cuts but we all know as a country it is necessary. It is going to be painful and controversial."
Action on spending was needed this year, he added, because of the "deteriorating" state of Europe's finances and as an "early instalment" to show the UK was serious about tackling the deficit.
He said the government should be judged on whether the cuts were "fairly administered", did not hit the most vulnerable in society and no regions of the country were singled out.
"If we don't bring sense to the public finances, we can't do any of the good things that we want to do," he said.
The government, which will hold an "emergency Budget" on 22 June, has said frontline services will be protected from cuts in spending.
Our correspondent said savings at the Department for Business, Innovation and Skills would mean "significant cuts" to regional development agencies in the south of England.
There would also be some savings on the universities budget, and reductions in administration costs.
A further £513m would be cut from quangos, with some like the QCDA - which oversees the national curriculum - due to be scrapped, she added.
Mr Clegg said it was "quite right" the Business Department should shoulder its fair share of the cuts and denied that Vince Cable, his Lib Dem colleague who runs the department, was unhappy about this.
The deputy prime minister also launched a fierce attack on what he said was "careless" spending by Labour in its final months, saying they made "extraordinary commitments...which they knew they could not honour".
It emerged last week that some civil servants raised concerns about spending decisions taken in the last months of the Labour administration but former ministers have defended their actions.
The new government has already said it intends to spend less on consultancy, restrict public sector recruitment and scrap some projects such as ID cards.
But with the deficit standing at £156bn, there are far more painful cuts to come, our correspondent added.
Labour have said budget cuts of this size will inevitably hit frontline services and threaten jobs.
Speaking on Saturday, shadow Treasury Chief Secretary Liam Byrne said he predicted the cuts would have "real impacts on people's lives....in direct contradiction to George Osborne and David Cameron's clear promise that frontline services would not be cut".
Meanwhile, both the Sunday Telegraph and the Sunday Mirror reported that a leaked late draft of the Queen's Speech, due to be delivered by the monarch at the state opening of Parliament on Tuesday, set out an ambitious 18-month programme of at least 21 parliamentary Bills.
The draft is also said to show that key school reforms and the scrapping of ID cards would be brought in within days.
According to the leaked draft, the Queen will announce that the government's priority will be to "reduce the deficit and restore economic growth" and to "accelerate the reduction of the structural budget deficit", with five Bills led by the Treasury.
It is also said to include a "great repeals Bill" to get rid of Labour legislation opposed by the Tories and Lib Dems when they were in opposition.
Downing Street said it was "disappointed" by the leak.