The first phase of the Government's "radical" welfare reform programme starts today with benefit claimants starting to be reassessed for their ability to work.
The move comes as new figures showed that almost £135 billion had been spent over the past 10 years keeping two million people "on the sick".
Long-term incapacity benefit claimants in Burnley and Aberdeen will be the first across the country to undergo a new test to see if they are fit for work.
Ministers said the reassessment was designed to end the one-size-fits all approach to those with health conditions and disabilities which has led to 2.1 million people being "trapped" on benefits.
But one charity voiced concern that the so-called Work Capability Assessment was not able to adequately establish whether mental health can affect someone's ability to work.
The Government published "shocking" new figures it said revealed the true cost of long-term benefit dependency to the British taxpayer, with almost £135 billion paid out in incapacity benefits since 2000.
These figures underlined the scale of the challenge and why urgent reform of the welfare system was needed, said the Government.
Ministers said the most severely disabled and people who were terminally ill will not be expected to look for work and will get extra help through Employment and Support Allowance (ESA).
But those people who are reassessed and found fit for work will move onto Jobseekers Allowance and will be expected to look for work.
Employment Minister Chris Grayling said: "It's nothing short of a scandal that so many people were simply cast aside to a lifetime on benefits, wasting their talents and potential and costing the taxpayer almost £135 billion.
"While some of these people will be genuinely too sick to work, there will be others who through no fault of their own were told by the state that they were better off on the sick and then left behind - this stops now.
"We are taking immediate action by starting the process of reassessing everyone on incapacity benefit to see if they can work, and for those that can we will be bringing in new support to get them into jobs."
Mental health charity Mind called for a revision of the test before it is rolled out to over 1.5 million claimants nationwide.
Sophie Corlett, Mind's director of external relations, said: "The benefit test being used in the pilots starting today has a fundamental problem when it comes to people with mental health problems - it does not do what it's set up for, which is to distinguish accurately which people can work and which people can't.
"Over half of all benefit claimants have a mental health problem, so it should go without saying that any fitness to work test should thoroughly assess mental health and whether it presents a barrier to work and coping in the workplace. However, many people with mental health issues have found that the impact of their condition on their ability to work is barely recognised.
"The Government wants to toughen up on benefit claimants while supporting those in genuine need - this system doesn't identify those in genuine need.
"The consequences of being wrongly declared fit for work can be devastating. People with mental health problems need vocational and health-related support to get them ready for a job again. Incorrectly putting these people onto Jobseekers Allowance will see a reduction in their benefit, less support for getting a job, greater pressure to get to work sooner, and financial sanctions applied if they fail.
"This could not only throw people into long-term poverty, but the distress could actively make their mental health problems worse, and make it even harder for them to get a job."
Mr Grayling denied there was a "target" to declare 23% of incapacity claimants well enough to get jobs.
He also said the test could be changed if it was not giving an accurate picture of individuals' conditions.
"If we need to make modifications to the test to get this right then we will do it," Mr Grayling told the BBC Radio 4 Today programme.
"I want this to work. This is not about forcing people who should not be in work into work. It is about doing the right thing by those people who can get back into work."