Britons who are out of work for several years will be forced to carry out community work to receive state unemployment payments, finance minister George Osborne announced on Monday.
Speaking at the annual party conference of Prime Minister David Cameron's Conservative party, Chancellor of the Exchequer Osborne also pledged to run a surplus by cutting spending.
He further announced that the Conservative-led coalition with the Liberal Democrats would freeze fuel duty until elections in 2015, in an apparent response to a pledge by the main opposition Labour party to freeze energy prices.
"For the first time, all long-term unemployed people who are capable of work will be required to do something in return for their benefits to help them find work," Osborne told Conservative delegates in Manchester, northwest England.
"They will do useful work putting something back into their community -- making meals for the elderly, clearing up litter, working for a local charity. Others will be made to attend a job centre every working day."
He added: "No one will be ignored or left without help. But no one will get something for nothing."
The so-called "help to work" policy is designed to woo traditional conservative voters.
Although the centre-right Tories are starting to close the gap in the opinion polls with Labour they are threatened on their right flank by the anti-immigration, anti-EU UK Independence Party (UKIP).
Under "help to work", the long-term unemployed will be forced from April to either do 30 hours a week of community work or go to an employment office every day to seek work.
People who break the rules once will lose four weeks' benefits, worth about £230 ($370, 275 euros), while a second infringement could cost them three months, officials said.
It will for people who have failed to find a job through the government's main work programme, a two-year process which provides support, training and work experience.
Britain is slowly emerging from a deep recession and unemployment is falling, reaching 7.7 percent in May to July this year, but long-term unemployment remains stubbornly high.
Official figures from the same period reveal that 469,000 people have been out of work for more than two years, up 27,000 from a year earlier.
Osborne said he was an "optimist" about Britain's long-term recovery.
"I can tell you today that when we've dealt with Labour's deficit, we will have a surplus in good times as insurance against difficult times ahead," he said.
"Provided the recovery is sustained, our goal is to achieve that surplus in the next parliament."
But Osborne, who has brought in tough austerity measures since coming to office in 2010 to cope with a record deficit, said that doing so would require "discipline and spending control."
"All of us are going to have to confront the costs of modern government -- and cap working age welfare bills."
The Tories claim the economic recovery is a vindication of their austerity programme, which remains unpopular and drew tens of thousands of trade unionists out in protest in Manchester on Sunday.
Meanwhile Osborne said he wanted to freeze tax on petrol until May 2015 "provided we can find the savings to pay for it".
The chancellor compared Labour leader Ed Miliband, who announced last week that Labour would freeze energy prices for 20 months, to Karl Marx, the father of communism.