Frank Field, the former Labour minister, is to conduct a major review into poverty levels across Britain.
David Cameron has invited Mr Field to be his "poverty tsar", as he puts the fight against deprivation at the heart of his agenda.
Mr Field, a long-time champion of welfare reform, is being asked to consider ways of tackling poverty and improving life chances "consistent with the Government's fiscal strategy".
He is understood to have sought reassurances that he could have a genuine input into policy before accepting the post.
The Birkenhead MP said: "This is a real opportunity to influence the next stage in how our counter-poverty strategy develops."
Mr Field was appointed minister for Welfare Reform by Tony Blair after Labour came to power in 1997, with a brief to "think the unthinkable". But he resigned after clashing with Gordon Brown and Harriet Harman.
Since then he has been a maverick, but highly respected, voice on the Labour backbenches. It is not clear whether his new role could open him to disciplinary action.
The Prime Minister said that understanding the root causes of poverty is vital "if we are going to make Britain a fairer society in which opportunity is more equal".