The long-term unemployed will have to undertake work placements in return for their benefits, under tougher rules unveiled by Chancellor George Osborne.
Welfare must be "fair for those who need it and fair for those who pay for it", he told the Tory conference.
Mr Osborne also announced that he hoped to freeze fuel duty until 2015 to help people with the cost of living.
While the UK was on the right track, he warned people their family finances would not be "transformed overnight".
The chancellor insisted the government's economic plan was working but was "far from complete" and turned his fire on Labour - accusing them of "declaring war on enterprise".
In other developments at Conservative conference:
- Transport Secretary Patrick McLoughlin said he was "proud" of the planned HS2 rail link and urged critics to stop "moaning"
- The UK Independence Party said it was open to local deals for its candidates to stand aside in seats with Eurosceptic MPs - but the Tories reject the idea
- David Cameron announced the Help to Buy mortgage scheme would be launched next week, three months earlier than planned
- Home Secretary Theresa May and Justice Secretary Chris Grayling address the conference later on Monday
In his speech Mr Osborne described Labour's policy to freeze energy prices for 20 months as "phoney" and compared Ed Miliband's political philosophy to that of Karl Marx.
He said he was optimistic about the future, saying the "sun had started to rise above the hill" but much more needed to be done to raise living standards for this generation and the next.
"There is no feeling at the conference of a task completed or a victory won," he said. "The battle for turning Britain round is not even close to being over."
He said he hoped to freeze fuel duty until the end of the current Parliament if savings could be found to pay for the move. Fuel duty has not risen since January 2011.
The RAC welcomed the announcement but called for a more fundamental overhaul of motoring taxation.
Mr Osborne also pledged to continue to keep control of spending even after the economic recovery was secured to avoid repeating the mistakes of "deluded" predecessors who believed they had abolished boom and bust.
Cleaning up litter
By running a budget surplus in the good times, he would "fix the roof while the sun was shining".
Labour said Mr Osborne could not be trusted to deliver a surplus, having had to backtrack on his earlier pledge to eliminate the structural deficit in 2015.
"By opposing the measures Labour announced last week to freeze energy prices and expand free childcare for working parents, the Tories have shown once again that they only ever stand up for a privileged few not for hard working families," shadow minister Rachel Reeves said.
On welfare, Mr Osborne said that while the government would not "abandon" the long-term unemployed, no-one would be able to get something for nothing.
Those who had not found work after two years on the existing Work Programme - where contractors are paid a fee to get people into a job - will face a new scheme called help-to-work.
To still qualify for jobseeker's allowance they will have three options - work placements, such as cleaning up litter; daily visits to a job centre; or taking part in compulsory training, for example, to improve their literacy.
People would have to remain on help-to-work until they found employment - unlike the current scheme which is limited to six months.
Those who breach the rules will lose four weeks' worth of benefits. Anyone who breaks the rules a second time faces losing three months' worth of benefits.
Mr Osborne told the conference: "We are saying there is no option of doing nothing for your benefits, no something-for-nothing any more.
"They will do useful work to put something back into their community; making meals for the elderly, clearing up litter, working for a local charity.
"Others will be made to attend the job centre every working day.
"And for those with underlying problems, like drug addiction and illiteracy, there will be an intensive regime of support. No-one will be ignored or left without help. But no-one will get something for nothing."
A Department of Work and Pensions assessment of mandatory work activity - a similar compulsory work scheme introduced by ministers in 2011 - found it "had no impact on the likelihood of being employed". And on the work programme, DWP figures suggested one in 10 of those seen found a long-term job.
Unions said the help-to-work plan was an admission that existing schemes had failed.
And business groups said "warm words" on enterprise and wealth creation must be backed up by a "relentless focus" in the years ahead.
"Breaking government addiction to debt and achieving a surplus in public finances is the most important ambition any administration can have," the Institute of Directors said.