Out of control hand-outs, which this year will be paid to three-quarters of senior civil servants, are to be restricted to high performers.
Under the terms of Whitehall contracts signed by Labour ministers at the height of the recession, bonus payments can not be cancelled by the incoming Government.
In future, however, windfalls across the public sector will be restricted to employees who have performed “exceptionally well,” with only the top 25 per cent eligible for the payments.
A separate commission will limit pay for the heads of state bodies to no more than 20 times that of staff on the lowest salaries.
And a taskforce, to be launched on Monday, will begin examining all Government expenditure to seek ways to cut back on “irrational” spending.
It will identify “poison pills” – spending commitments entered into during the “dying days” of the last government.