The initiative, thought to be the first of its scale in the world, will be seen as the final triumph of the market research-led techniques that helped the Labour Party to power in this year's election. Officials hope to get the scheme up and running by the end of the year.
The "people's panel", which will cost tens of thousands of pounds, will be set up by private pollsters and paid for by the Cabinet Office.
Ministers see the plan as an important way of addressing the gulf between politicians and voters, and making government more democratic. But others are likely to deride the initiative as a marketing gimmick.
The pollsters will select about 5,000 people in a representative sample of the population which will sit for at least a year.
The Cabinet Office will be able to use the facility to test popular attitude to public services, from utilities such as gas, electricity and water, to transport - the performance of bus companies, for example. The service will also be on offer to other departments which will be given the chance to test reaction to existing policies and to new ideas.
David Clark, Chancellor of the Duchy of Lancaster, last week told British and American journalists that the contract for the people's panel would shortly be put out to tender. Dr Clark is now in the US examining ways in which the Americans get citizens involved in government.
Already his department has had discussions with MORI, the pollsters, and Opinion Leader Research, a company specialising in focus groups, run by Deborah Mattinson, who used to work for the Labour Party.
During Labour's opposition years, focus groups were seen as a vital component of modernisation. Tony Blair, the Prime Minister, is known to be highly sensitive to polling information provided for him by his close ally, Philip Gould. But focus groups have also been the object of Tory attacks and the charge that Labour policy has been dictated more by pollsters than principle.
Three services will be on offer under the people's panel initiative: telephone surveys; focus groups of about 10 people to undertake "qualitative" research; and larger "citizens' juries" where those chosen will spend several days answering detailed questions posed by a range of experts.
The "juries", which have been trialled in Germany and the US, usually cost about pounds 20,000. Focus groups are usually between pounds 2,000 and pounds 6,000.
The people's panel will be drawn up to ensure that individual groupings, such as ethnic minorities, disabled people or older age groups, can be drawn out and quizzed on specific issues or policies. Under existing plans, if it sits for more than a year, one third will be replaced to protect the spontaneity of responses. One idea is that the 5,000-strong group might be wired up through the Internet.
Among those particularly keen to use the new service is the Social Security Secretary, Harriet Harman, who chairs the ministerial group devoted to women's issues. That unit is likely to be a joint sponsor of the scheme with the Cabinet Office. Other departments wanting research work will be expected to foot the bill.
The reasoning for the people's panel arose out of the Citizen's Charter which the Government inherited from the Tories. That initiative, which was one of John Major's flagship policies, was widely regarded as a failure.
Dr Clark argues that government remains unsure of the public's attitude both to it and to the services it offers. The people's panel will, he argues, present an opportunity for a new start.
A Conservative spokesman said: "This raises lots of questions. They won't do anything they believe in or anything they think will work. They will gauge public reaction only. This looks like party-political research at the taxpayer's expense. If they believe in open government they should make all the research findings publicly available."