Millions of public sector workers will lose automatic annual pay increases as part of an £11.5bn cuts package being unveiled by Chancellor George Osborne.
Mr Osborne said it was "deeply unfair" to public servants who did not get it and the private sector who paid for it.
The chancellor is setting out spending cuts for 2015/16 forced on him by slower than expected economic growth and deficit reduction.
Labour has said it will stick to the plans if it wins the 2015 election.
Briefing MPs on the plans, which will kick in just before the election, Mr Osborne insisted the economy was on the right track, saying: "Britain is moving out of intensive care and moving from rescue to recovery."
Further job cuts
He said the cuts would be done in a fair way and would boost growth. Reforms such as ending "progression pay" in favour of performance-related increases would ease the pain.
"Progression pay can at best be described as antiquated; at worst, it's deeply unfair to other parts of the public sector who don't get it and to the private sector who have to pay for it.
"So we will end automatic progression pay in the Civil Service by 2015-16.
"And we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police.
"The armed forces will be excluded from these reforms.
"Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses."
He also warned of further job cuts in the public sector, as he unveiled a 10% budget cut for the department for communities and local government.
Security services
The heath service, schools and foreign aid will continue to be protected from budget cuts, Mr Osborne confirmed, meaning that all other department are taking a bigger hit, with average cuts of between 8% and 10%.
The Department for Communities and Local Government, the Treasury and the Department for the Environment and Rural Affairs appear to have taken the biggest hits, with budget cuts for 2015/16 of 10%.
Theresa May's Home Office escaped with cuts of 6% and a commitment to protect anti-terror policing.
Vince Cable's business department - the last to reach a deal with Mr Osborne after tough negotiations - also got off relatively lightly with cuts of 6% and a commitment to keep money for more apprenticeships, but student grants will be frozen.
The culture department also escaped the worst of the cuts, with a reduction of 7%, while the Foreign Office will be cut by 8%.
The security services were the biggest winners, with a 3.4% boost to funding, with Mr Osborne praising their "heroic" efforts to "protect us and our way of life".
Timeframe slipped
There will be no further cuts to benefits - but Mr Osborne announce plans for cap on welfare spending in his statement.
The chancellor also announced long-term plans to invest more in Britain's infrastructure in building roads, railways and housing, with full details to follow on Thursday.
The next general election is scheduled for May 2015 and the Conservative-Liberal Democrat coalition has to set out its budgetary plans for the final few weeks of its time in office, irrespective of the outcome of the poll.
Labour has said that it would match the coalition's current spending totals for the full one-year period.
The chancellor had initially hoped to eliminate the structural deficit - the portion of borrowing that is not affected by changes in the economic cycle - entirely by 2014-15.
But the timeframe for this has slipped to 2017-18 and Mr Osborne will have to borrow £275bn more than he expected in this parliament than at the time of his first Budget in 2010.
The government says it has cut overall borrowing by a quarter since coming to power and by a third as a share of GDP.
Revised official figures released on Friday showed that borrowing rose slightly to £118.8bn in 2012-13 from £118.5bn the year before.
Labour leader Ed Miliband said the coalition had broken its promise to clear the deficit and the British people were paying the price for its failure.
Speaking ahead of the chancellor's statement, he said: "They tell us the economy is healing in government but actually things are getting worse for ordinary families. What we actually need is a fairer plan to get growth moving, living standards rising and the deficit down."
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