Figures from the Department for Work and Pensions revealed last week how 100,000 households in the UK earn more than £23,500 a year ($31,000 US) on benefits, which is above the country's minimum wage.
Employment Minister Chris Grayling said that the figures indicated a desperate need for reform.
“When thousands of people are earning more on benefits than hard working families struggling to get by, there must be something wrong, and I’m shocked that this was allowed to happen," he said in a statement.
The last 11 years of the Labour government have seen exponential investment in the country's benefit system.
This year, at least 12 million working-age households are on benefits, at a cost to the taxpayer of around £85 billion per year.
As part of a sweeping mandate to cut Britain's record deficit, the Conservative-Liberal coalition is taking aim at Britain's benefit culture.
Last week, the Work and Pensions Secretary Iain Duncan Smith revealed a consultation paper titled 21st Century Welfare, which gave a list of options for simplifying the benefits system.
One in six children in the UK grows up in a household where there are no working adults, Duncan Smith said, adding that the current welfare system has "institutionalised" idleness.
Aside from possible cuts to the availability of benefits, the government is also taking aim at benefit fraud and errors in the welfare system – two problems which taken together cost the taxpayer over £5 billion a year.
In a column for the Sunday Times, Prime Minister David Cameron said that benefit fraud was an area of "ingrained waste", which urgently needed to be tackled.
"Many see it as a fact of British life that we have no hope of defeating," he wrote. "I passionately disagree.
"Simply shrugging our shoulders at benefit fraud is a luxury we can no longer afford."