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Millions of public sector workers will lose automatic annual pay increases as part of an £11.5bn cuts package unveiled by Chancellor George Osborne.
He also announced a cap on total welfare spending and axed winter fuel payments for expatriate pensioners in hot countries from 2015.
And unemployed people will have to visit the job centre every week instead of fortnightly.
The cuts package will cover a single financial year - 2015/16.
It was forced on the chancellor by slower than expected economic growth and deficit reduction but he insisted the economy was on the right track, telling MPs: "Britain is moving out of intensive care and moving from rescue to recovery."
