A big extension of the use of private companies to help the Government to try to get a million more people off welfare benefits and into work is planned by ministers.

Single parents could face tougher conditions and earlier work tests to encourage them to take jobs. At present half the lone parents in Britain work.

A range of measures to reduce the stark figure of 4.9 million people of work age who claim benefit will be brought forward in a review for the Work and Pensions Department this month.

In a speech in Sydney tomorrow John Hutton, the Work and Pensions Secretary, will say that he wants Britain to follow the Australian practice of making radical use of private providers to put long-term unemployed into jobs. He is considering paying them by results, with incentives if people are still in work after 13 weeks.

Mr Hutton will say that the challenge of the coming decade is to tackle entrenched poverty and worklessness, particularly among lone parents and incapacity benefit claimants. In a reference to the imminent Comprehensive Spending Review, he will say that Britain faces the twin challenges of getting four million economically inactive people into work during the toughest spending round for a decade.

The review, by David Freud, a former investment banker, has looked at making benefits more conditional on the search for work. It is thought that he will propose that lone parents should be asked to do more. At present they face tighter conditions when their children become 16 but in other European nations, where the rate of lone-parent unemployment is much lower, they get more help much earlier to find jobs and justify benefits if they are not in work.

He will also accept that the nationwide extension of child-care facilities will be important.

- One in three households across Britain depends on state benefits for at least half its income, according to a report released today by the right-of-centre think-tank Civitas. It says that the figure is far higher for single-parent homes, with 61 per cent relying on state support compared with 9 per cent of two-parent households.

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