George Osborne is preparing to wield the axe in a fresh round of spending cuts that will set the tone for the next general election.
The chancellor is to unveil £11.5bn of cuts for a single financial year - 2015/16 - to help reduce the deficit.
Health and schools in England and foreign aid will continue to be protected, meaning all other department will have to take a bigger hit.
Labour has said it will stick to the plans if it wins the next election.
Mr Osborne will outline the Spending Review in the House of Commons from 12:30 BST.
Intelligence winnersBBC political editor Nick Robinson says there will be no fresh welfare cuts, but there will be more detail of a long-term plan to cap much of benefits spending and a move to limit the payment of winter fuel allowance to pensioners who live abroad.
Guide to the Spending Review
- Government departments set out spending for set period of time
- George Osborne needs to find £11.5bn in savings
- The 2015-16 timetable is designed to last a little while beyond the next general election
- Mr Osborne will set out details to MPs at 12:30 BST
- You can follow it live on the BBC website and on an extended Daily Politics on BBC2. There are also special programmes on BBC Radio 4 and 5 live
Spending on the NHS, schools and overseas aid will continue to be protected and the intelligence services will be the biggest winners of a spending increase, he adds.
The chancellor will also announce long-term plans to invest more in Britain's infrastructure in building roads, railways and housing.
The next general election is scheduled for May 2015 and the Conservative-Liberal Democrat coalition has to set out its budgetary plans for the final few weeks of its time in office, irrespective of the outcome of the poll.
Labour has said that it would match the coalition's current spending totals for the full one-year period.
On Sunday, Mr Osborne announced that the Ministry of Defence would have to shed civilian staff, but the UK's military capacity would not be affected.
'Out of intensive care'The last department to reach a settlement on its budget was Vince Cable's Department for Business and Skills.
Analysis
This year the government is planning to spend about £720bn - just over £32,500 per UK household.
Because there is more money going out of the Treasury than coming in, from tax, there is a deficit. The Treasury is about £5,000 short per household.
About a third of government spending goes on welfare and pensions - about £10,000 per household.
That will not be touched in today's Spending Review.
The second biggest cost is health, about £6,200 per household, then education, which costs each household almost £4,500 a year.
Debt interest payments cost us all an average of £2,300 a year.
The NHS and schools in England are both protected from budget cuts - meaning other departments will have to take a bigger hit in the Spending Review.
So all eyes will be on departments like defence, local government and the home office to see how much pain they will suffer.
The agreements followed weeks of arguments with ministers.
The chancellor had initially hoped to eliminate the structural deficit - the portion of borrowing that is not affected by changes in the economic cycle - entirely by 2014-15.
But the timeframe for this has slipped to 2017-18 and Mr Osborne will have to borrow £275bn more than he expected in this parliament than at the time of his first Budget in 2010.
The government says it has cut overall borrowing by a quarter since coming to power and by a third as a share of GDP.
Revised official figures released on Friday showed that borrowing rose slightly to £118.8bn in 2012-13 from £118.5bn the year before.
Mr Osborne has indicated the coalition is determined to stick to its austerity plan, saying: "I'm confident we are coming out of intensive care and we can turn this country around. There's certainly a chance of a relapse if we abandon our plan."
But shadow financial secretary to the Treasury Chris Leslie said: "This Spending Review is happening because David Cameron and George Osborne's economic plan has failed.
"Three years of falling living standards and a flat-lining economy has led to billions more borrowing to pay for economic failure. Far from balancing the books by 2015, as the government promised, the chancellor is being forced to make even more cuts."
Ministers will also set out plans to invest billions of pounds in transport, science and other capital projects on Thursday.
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