Ed Miliband is to promise there will be no return to the tax and spend policies of past Labour governments.
The Labour leader is to tell activists at the party's national policy forum that higher spending would not solve the UK's economic problems.
But he will say a Labour government would be more radical than in the past - freezing energy prices, improving the minimum wage and building more homes.
The forum will also hear about plans to part-renationalise the railways.
The national policy forum in Milton Keynes will see Labour finalise many of the policies it will argue for at next year's general election.
BBC political correspondent Iain Watson said Mr Miliband will speak to around 200 party activists and trade unionists at the forum but his message is aimed at a much larger audience.
Trailing in the polls on the issue of economic competence, the Labour leader will emphasise that he has no intention of returning to the "era of tax and spend", our correspondent added.
'Our traditional answer'In his address, Mr Miliband will say a Labour government would make a "binding commitment to balance the books".
"Start Quote
End Quote Ed MilibandWe have moved on from New Labour. And we are not going back to Old Labour"
There would be a surplus in day to day spending although this would not prevent borrowing for investment.
"For all of the cuts, for all of the pain under this government, Britain still has a deficit to deal with and a debt to pay down," he will say.
Trade unions such as Unite have warned against prolonging austerity but Mr Miliband will argue that a lack of spending would not lead to a lack of ambition.
He will say the last Labour government did not address underlying flaws in the economy before the financial crash.
Mr Miliband is expected to portray the "Tory approach" as one of "low wages, zero hours, bad terms and conditions".
But he will acknowledge that while "problems have got worse under the Tories... they started before the recession and the answer cannot be our traditional answer: Of spending to fix the problem".
"We have moved on from New Labour. And we are not going back to Old Labour," Mr Miliband will add.
"Our programme for government is more radical and more ambitious in the change we seek."
'More wasteful spending'Mr Miliband will propose that low pay should tackled not through more spending on tax credits but by compelling employers to provide a more generous minimum wage and by investing in training to help people into higher paid work.
"We did great things in government to redistribute resources. But we did not do enough to reduce inequality, or eliminate the problem of low pay, or build an economy that will work for the next generation," he will say.
"Start Quote
End Quote Sajid Javid Culture SecretaryIt's clearer than ever that Ed Miliband has no long-term plan to secure Britain's future "
Responding to extracts from Mr Miliband's speech, Conservative cabinet minister Sajid Javid said: "The reality is Labour haven't learnt the lessons from their mistakes.
"All Ed Miliband offers is more wasteful spending, more borrowing and more taxes.
"That's exactly what got us into a mess in the first place, and hardworking taxpayers would pay the price.
"It's clearer than ever that Ed Miliband has no long-term plan to secure Britain's future and is just not up to the job."
Labour's plans for the rail network were revealed earlier in the week.
Party leaders at the policy forum are understood to be preparing to fight off calls for full-scale renationalisation of the railways.
But it is thought that their plans will see public and not-for-profit companies allowed to run train services as well as private firms.
Its proposed new law would allow the creation of a state-owned train company to compete against private rail companies to run services in different parts of the country.
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