George Osborne has launched his spending review with a call for £20bn cuts to Whitehall budgets.
Letters will ask departments to model two scenarios of 25 per cent and 40 per cent of savings within their resource budgets by 2019-20 in real terms.
The chancellor said departments had also been asked to help meet a target of 150,000 new homes on public sector land by 2020.
The NHS and per-pupil schools budgets will be protected in the review, which will be published on November 25.
Mr Osborne told MPs that “with careful management of public money, we can get more for less”.
But the BBC’s economics editor, Robert Peston, said what was being proposed would require a reinvention of some services taken for granted by the public.
He said: “Ministers and officials in all but protected departments and services – that is everything but health, schools, defence and overseas aid – are having panic attacks today.
“Because they have been instructed by the chancellor to “model” the impact on the services they provide of finding savings of either 25 per cent or 40 per cent by 2019-20 – or £20bn per annum of cuts in aggregate. This is the stuff of public-service reinvention, not efficiency.”
Fresh from an election victory in May, Mr Osborne has already set out plans to cut 12 billion pounds from the welfare budget as he seeks to rebalance Britain’s public finances.
The Chancellor also told ministers to identify NHS, defence and other government assets to be disposed of in order to help meet the homes target.
The Ministry of Defence alone owns 227,300 hectares – one per cent of all land in the UK, including 15 golf courses.
Cabinet Office minister Matthew Hancock said that £1.5bn of land had been disposed of during the last Parliament and that ministers had only “just started getting going”.
“It is clear we can release much, much more,” he told BBC Radio 4’s World at One. “It also contributes to our wider objectives like housebuilding. The two go hand in hand.”
Earlier this year, Defence Secretary Michael Fallon questioned the need for the MoD to have 57 separate sites within the M25 and asked: “Does the MoD really need to own 15 golf courses?”