Family doctors will be financially rewarded for encouraging sick patients back to work under highly controversial plans to reform the welfare state.

GPs will be expected to work with employment advisers in their surgeries to help people requesting a sick note for conditions ranging from stress to chronic injuries to find other jobs, rather than go onto long-term incapacity benefit. The incentives plan has yet to be negotiated with GPs; doctors' leaders warned last night that it could compromise their relationship with patients. But it could be modelled on arrangements which see GPs receiving extra money, for example, for ensuring children are vaccinated.

The move is part of a welfare reform green paper to be launched on Tuesday by the Work and Pensions Secretary, John Hutton, which will see savings channelled back to local councils to spend on other services. Single mothers on benefits will also be expected to seek work once their children reach secondary school age, or face having their payments cut.

'What we are doing is getting people back into work rather than going on the sick,' said a source at the Department for Work and Pensions. 'As we are going to be starting employment advisers in surgeries, that is going to create much stronger links between the world of work and GPs. We are looking to see if there are ways of measuring the number of people they are pointing towards work.'

But Dr Hamish Meldrum, chairman of the GPs' committee of the British Medical Association, said that GPs' first duty was to patients. 'Are GPs acting on behalf of their patients, or are they working as some sort of arm of the Department of Work and Pensions? Most GPs would consider themselves in the former category,' he said.

Hutton is expected to argue that it is crucial to the well-being of the long-term sick that they are offered opportunities to work if they can. He will also emphasise the benefits to the wider community, with city leaders told they can keep part of any savings made from getting lone parents or the long-term sick back to work. Private firms could run the programmes locally.

'If you can put together a strategy, involving a range of providers, and get people back to work, then the community will be rewarded,' said the DWP official.

People on incapacity benefit judged capable of at least some work will have to draw up 'action plans', which could mean undergoing training or preparing CVs, or see their benefits reduced. Those judged too ill to work will get more generous benefits than at present.

Currently, single mothers can stay at home until their youngest child reaches the age of 14, but the age limit will be lowered to 11. They will have to attend work-focused interviews, but will not be forced to take jobs.