He said the choice to sit at home “with the blinds pulled down” is coming to an end, in an interview with the BBC. “The money won’t be there to support that lifestyle,” he added.
The £4bn cuts to come in by 2015 are on top of the £11bn savings set out in the June Budget.
Osborne said around 5m people of working age live on benefits, which costs around £192bn a year.
Deputy Prime Minister Nick Clegg tried to soften the impact of Osborne’s plans, however, saying in a separate interview that there is no “sword of Damocles that’s going to come down straight away” to cut spending.
Osborne’s announcement came as a leading economic think-tank warned the chancellor he should postpone plans to cut the budget deficit because of the slowing recovery.
In an abrupt U-turn from its support earlier in the year for immediate fiscal tightening, the Organisation for Economic Cooperation and Development (OECD) advised policymakers worldwide to be careful not to choke off the economic recovery by cutting back on spending too much and too soon. The OECD forecasts the UK to grow at an annualised rate of 2.7 per cent in the third quarter – the strongest growth of the G7.