The government has set out a series of measures to tackle benefit fraud, as ministers spend the weekend finalising spending cuts.
The steps would mean anyone with three convictions could forfeit their rights to benefits for up to three years.
Chancellor George Osborne said welfare fraudsters were robbing taxpayers of billions of pounds a year, adding it was time to get "very, very tough".
He will announce the results of the spending review on Wednesday.
The chancellor said cheating the benefits system was "unacceptable at the best of times and totally immoral" when the UK had a huge budget deficit.
He told BBC One's Andrew Marr Show it was necessary to be tough on those responsible because "we can't afford to go on like this anymore".
Mr Osborne said state aid had "to go to the people who need it, and people who pay for it these days are going to demand no less".
Under the new scheme every welfare offence - no matter how minor - would mean an immediate fine of £50.
The government is promising to share more data with credit reference agencies to find patterns of offending.
It is also recruiting 200 new inspectors, creating a mobile task force to go into areas with high rates of fraud and check every claim individually.
The strategy, to be unveiled on Monday, will use hi-tech data tracking techniques between government offices and credit reference agencies.
Welfare reform minister Lord Freud said: "Fraud and error is costing the government and the taxpayer £5bn a year - this is unfair and unacceptable.
"We are reforming the system and stepping up our efforts to catch the benefit and tax cheats who are stealing money which is meant for the most vulnerable people in our society.
"When people are convicted we will get back the money we are owed by introducing tough punishments and stripping the assets of criminal gangs - my message to them is that benefit fraud is a crime that just doesn't pay."
BBC political correspondent Vicki Young said the key message from ministers as they approach the Spending Review was that the burden of cutting the deficit would be shared.
Even at this late stage, there is speculation that child benefit could be restricted further - axing the payment for children over 16 would save the Treasury about £2bn a year.