More long-term unemployed people could have their benefits cut - or stopped altogether - under new proposals.
Work secretary John Hutton said he wants to end the "can work but won't work" culture, saying society should expect more in return for benefits.
He said a "hardcore" of claimants was not competing with east European migrants for jobs.
But the Conservatives and some Labour MPs have questioned what stricter sanctions would achieve.
Government figures show 950,000 people claimed Jobseekers' Allowance last month. About 100,000 of them had spent six of the past seven years on benefits.
'Two fingers'
In his speech at the Institute for Public Policy Research (IPPR) in London, Mr Hutton compared the long-term unemployed with new migrants to Britain.
He added: "The next challenge we face is to ensure the hardcore of 'can work but won't work' benefit claimants take advantage of the opportunities out there and compete for jobs alongside growing numbers of migrants who arrive in Britain specifically to look for work rather than to settle for the long term."
There was no shortage of vacancies for low-skilled workers, even in areas of relatively high unemployment, he argued.
"Economic migration from the EU has only served to highlight this issue.
"If workers from Poland can take advantage of these vacancies in our major cities - why can't our own people do so as well?," he said.
He suggested there could be moves to cut - or even stop - benefits for those who did not do enough to find work.
At the moment, only a very small percentage of jobseekers face such sanctions.
"We need to ask whether we should expect more from some in return for the help we provide," Mr Hutton said.
'Consequences'
People had to take "more active steps to get back into the labour market" and become more involved in programmes that could help them get a job.
"And for those who won't do so, then there should be consequences, including less benefit or no benefit at all," he told the IPPR.
Mr Hutton said it was also important to help people "up the career leader" and that "the labour exchange of the past must become the skills exchange of the future".
But initiatives which compel people off benefits may face resistance from the Tories and some Labour MPs.
Shadow Work and Pensions Secretary Philip Hammond told the BBC: "The Labour Party knows it has created the next prime minister in Mr Blair who isn't going to deliver, who isn't going to continue, with the Blairite programmes and what Mr Hutton and Mr Blair and his colleagues are trying to do is set the agenda for the next 10 years and lock Mr Brown in.
"If this was a serious proposal why isn't it included in the Welfare Reform Bill that's currently going through Parliament?"
More than half a million have arrived from Poland and other countries since 2004, far more than the Home Office prediction of about 13,000.
Of course they introduce this "problem" by presenting it in terms the people will easily swallow - getting people off the dole. But that isn't really what this is all about.
Allowing so many migrants into this country has been for one thing. To create a new highly competitive environment within this country. As prices start to rise, and houses get out of the reach of the average person. As companies start expecting people to work longer and longer hours for less. Guess who will do the work.
There is only so far you can push the average English Joe before they say enough is enough. By allowing so many migrants into this country the Government have effectively ensured that this will not happen. If the English will not work, than the migrants will. And that is the truth of it. Eventually we will have to "compete" for low paid - longer hour jobs, with migrants who are willing to work 20hour days.
Not to mention what happens in the event of an economic collapse. Most people won't be able to afford low paid jobs, but will have little choice. It is interesting to see how quick all this is unfolding. Our local superstore, recently employed a load of Polish people, but not only that, they arranged for housing for them as well as providing them with a stock of food. Now I want to be clear that I don't have a problem with helping people out - and I certainly don't have a problem with Polish people - or any other people.
The issue here, is about the situation the Government is creating in this country. I get the impression they are looking some years down the line, and ensuring that no matter what happens they still have a work-force.
The implications of this, not just in the job sector but in every aspect of our lives is massive. The Government have basically created a "get out of jail free" card for themselves.
Added into this the increasing racial tensions in this country, which the media are perpetuating - hardly a day goes by without a mainstream newspaper blaming this or that on the Muslims. I have to wonder how long it will be until the riots start.
I am not sure how this is seen in other countries – or if it is such a problem. Over here, I live in a relatively small town, but within the last year it has become full of Polish, other Eastern European and will as mid-eastern people. So the scale of this is being widely felt.
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