He detailed deep cuts with the department of transport to see £683m shaved from its budget.
Meanwhile the business department will be cut to the tune of £836m.
The education department will take a £670m hit but the savings will be pumped back into the service. The Sure Start scheme will also be protected.
But Child Trust Funds will be scrapped as part of the drastic cost-cutting measures.
Osborne said: "We simply cannot afford to increase public debt at the rate of £3bn each week. Our huge public debts threatened financial stability and if left unchecked would derail the economic recovery.
"Public borrowing is only taxation deferred and it would be deeply irresponsible to continue to accumulate vast debts that would have to be paid off by our children, and our grand children for many decades to come."
The chancellor also said there would be a freeze on civil service recruitment, as well as cuts to IT schemed and quangos.