A mandatory intensive regime for claimants with underlying problems such as mental health, drug addiction or illiteracy.
People who refuse to take part will lose four weeks' worth of benefit for their first breach of the rules and three months' worth for a second offence.
Although the benefit sanctions will be controversial, the Tories regard the "work for dole" scheme as an example of "tough love" and insist their aim is to help the jobless back into work. They believe there is strong public support for their welfare reforms, particularly for the 26,000-a-year cap on the amount one family can claim.
The Tories have dubbed Labour "the welfare party", but Opposition Leader Ed Miliband fought back last week with a pledge to scrap the so-called bedroom tax if his party regains power.
The shadow treasury secretary, Rachel Reeves, said: "It's taken three wasted years of rising long-term unemployment and a failed Work Programme to come up with this new scheme. But this policy is not as ambitious as Labour's compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months, and for every adult unemployed for more than two years.
"With Labour's plans, we would work with employers to ensure there are jobs for young people and the long-term unemployed - which they would have to take up or lose benefits. Under the Tory scheme, people would still be allowed to languish on the dole for years on end without having a proper job."
Neal Lawson, who chairs the left-leaning pressure group Compass, said the long-term unemployed "need deep long-term help to get them working". "Short-term gimmicks to light up the Tory conference will cost the taxpayer more and further stigmatise the most vulnerable in our society," he added.
A Liberal Democrat spokesman declined to comment on whether the party would support or oppose Osborne's move.
But the Chancellor will tell the conference: "For the first time, all long-term unemployed people who are capable of work will be required to do something in return for their benefits to help them find work. No one will be ignored or left without help. But no one will get something for nothing. Because a fair welfare system is fair to those who need it and fair to those who pay for it too."
He is expected to say that when Labour left office in 2010, five million people were on out-of-work benefits.
"A generation of people recycled through the jobcentres, collecting their dole cheques year in year out, and no one seemed to notice."
- Independent