Civil service numbers will be cut and surplus official buildings sold off as the Government trims £35bn from its own bills.
The projected saving is £5bn more than ministers originally hoped – and enough to pay for a series of major capital building projects.
Ministers are looking to cut procurement costs through bulk-buying by departments and hope to trim bills for new computer systems.
Further job losses among civil servants look inevitable. A series of assets could be sold to the private sector, although the downturn may mean a low price for the taxpayer.
Ministers are considering selling Ordnance Survey and the Met Office. The Queen Elizabeth II conference centre in Westminster could be on the market, and buildings owned by British Waterways. The Forestry Commission and British Nuclear Fuels' stake in Urenco, a uranium enrichment company, may also go. Channel 4 will not be in the fire sale.
About £300m will be saved this year on consultants, lawyers and computer experts. Extra economies have been identified on the costs of heat, lighting and computer support.
Alistair Darling, the Chancellor, promised that nothing would be cut that would hit the quality of front-line services. He explained: "The efficiencies will come through lowering the cost of back-office operations, better procurement, examining property holdings and asset sales."
Labour hopes the purge on spending will undercut a key Tory message at the next election. David Cameron is examining radical options to find billions of pounds in savings.