David Cameron has appointed Tory peer Lord Young as his Enterprise Tsar with a remit to slash red tape for small business.
A "brutally honest" review by the former Cabinet minister will also consider how to encourage more people to start up companies.
The Prime Minister said enterprise was crucial to his efforts to create a "new economic dynamism" in Britain, stressing that small and medium-sized businesses provided 60% of the country's jobs.
"I am seeking nothing less than a wholesale change in attitude from my Government and I need help to get there," he said. "So I am delighted that Lord Young has agreed to be my Enterprise Adviser; he'll be working to identify what we need to do to help small businesses grow.
"He brings his own passion for business and a wealth of experience to the role."
In a letter to the peer he added: "Today, Government is institutionally biased against small businesses and enterprise.
"Despite warm words from ministers and governments of all parties, the obstacles and burdens facing small businesses have multiplied over the years.
"Governments have been cavalier in introducing regulations and requirements, wrongly assuming small business owners can just take them in their stride, when in fact it can make their lives impossible.
"This Government must and will be different."
Apprentice star Lord Sugar was the last holder of the post under ex-premier Gordon Brown, but he was fired by Mr Cameron when the coalition came to power.
Lord Young, who served as Trade Secretary under Margaret Thatcher, said: "I'll be focusing on what barriers government policy have been put in the way of small business development and helping to advise on what can be done to make life easier for businesses to start and grow."
Downing Street said his review would focus on:
:: How government can remove barriers and encourage more people to start business, including correcting an institutional bias towards people seeking jobs rather than working for themselves
:: Ways in which government can remove barriers to growth faced by firms and remove or minimise regulatory and bureaucratic burdens which increase costs and hassle
:: Ways in which Government departments and the public sector can support growth of small, through reforming procurement, ensuring access to finance, and supporting trade and investment
:: How government listens to small and medium enterprises in shaping and implementing policy, and providing clear guidance and advice.
Lord Young will juggle his unpaid role as Enterprise Tsar with his other work as Mr Cameron's adviser on health and safety law and culture.
Business Secretary Vince Cable is due to host a small business summit this morning with ministerial colleagues, to discuss the Government's policies.
The peer appeared to be on a collision course with another of the Prime Minister's high-profile business advisers over calls for the Government to save cash by delaying payments to small firms.
As part of his review of Whitehall spending inefficiencies, billionaire retailer Sir Philip Green questioned the need for a five-day target for settling bills with smaller suppliers, introduced under Labour.
But Lord Young said that would put vital firms out of business and indicated that he was personally opposed to the move as ministers were "not running a business" although he was yet to gather wider opinions.
"That is one small part of very valuable advice he gave us about how to buy better. I would like to speak to everybody first but without speaking to anyone I would say: don't do it," he told the BBC Radio 4 Today programme.
He went on: "There is no confusion: what Philip Green has said is that if you are running a business, for heaven's sake make use of all the capital that you have.
"Now we are not running a business, we are running a country and it is in the Government's interest to see prosperous small firms. They are 60% of the employment in the private sector, half the GDP.
"Yes the Government could use its power and could squeeze small businesses and get some cash in and we would end up with no businesses. That's not what Government's about."
Lord Young also said one of the areas he would like to examine was extending the time someone needed to work for a small firm before being able to bring a claim for unfair dismissal - presently one year.
"Back in the '80s when we did that, the result was that employment starting shooting up again. I want to find out what small business people themselves think about this and then we'll think about it.
"There are lots of lines I would like to go down... that is one of them but I would like to listen first."
Firms should also be able to pre-qualify as a supplier for all local authorities at once rather than having to undergo the process with every council individually, he suggested.