Every government department will have to sign a public service agreement containing efficiency targets to improve productivity.
Stephen Byers, the chief secretary to the treasury, unveiled the initiative after a government survey found civil servants take off an average 10.2 days a year on sick leave.
Mr Byers hailed the public service agreements as 'ground-breaking documents' which would reduce absenteeism and tackle fraud. He said: 'We need to ensure we achieve value for money for every pound of taxpayers' money spent. High quality public service and greater efficiency go hand in hand.'
'The way forward is working with partnership with better occupational health resources devoted to rehabilitating staff rather than sacking them,' he said. 'Setting hard targets and other punitive policies will merely force sick people back to work.'