But disability charities immediately attacked the Welfare Reform Bill saying that it was "dangerously flawed" in the way it planned to change benefit criteria for the disabled.
The Bill is one of the main parts of this year's legislative programme, aiming to modernise the welfare state on principles of "work, security, fairness and value for money".
One priority is a shake-up of the pension system. The Bill will introduce a second-tier "stakeholder" pension for those who cannot join an occupational pension scheme and for whom a personal pension is unsuitable. Targets include the self-employed, people who change jobs several times and those who take time out to bring up their children.
But the Bill alone will not be the Government's last word on pensions. The Green Paper on pensions next month will set out phase two of the "stakeholder pensions" plan, and tackle the contentious issue of whether people should be forced to join such a scheme.
Yesterday's Bill will also simplify "pension splitting" between divorcing couples making it easier for assets to be divided fairly after a break- up.
Reforms to widows' benefits will provide widowers as well as widows with pounds 2,000 upon bereavement with a weekly benefit for six months for those with no children and continuing for widowed parents until the youngest child ceases to be dependent.
The Bill will also make it compulsory for benefits claimants to attend an interview with a personal adviser if they want to receive benefit, as part of a new single "gateway" into the system. .
Stricter tests will also be introduced for Incapacity Benefit, replacing the much-criticised "all- work" test to ensure it is only paid to those in "genuine need". There will be additional help for severely disabled children, and those disabled at birth or childhood who do not have the opportunity to work. It also introduced a Disability Rights Commission Bill.
While disability groups welcomed the Bill, they strongly criticised the change to benefits. A spokesman for the Royal National Institute for the Blind, said: "The more we look at the Government's proposals for disability benefits, the more we discover how damaging they are."
Another key element of welfare reform is the Tax Credits Bill which will introduce the Working Families Tax Credit (WFTC) and Disabled Person's Tax Credit (DPTC). The WFTC aims to ensure that low- and middle-income families keep more of what they earn with the guarantee of a pounds 190 minimum weekly income for a family in full-time work. The DPTCaffects 22,500 people and will allow a higher earnings threshold .