Most government departments are being asked to produce "illustrative plans" for spending cuts of up to 40%.
The Treasury wants departmental heads to set out how they would cut spending by both 25% and 40% by the end of July.
But education and defence have been given some protection from the worst of the cuts, and will have to draw up plans for cuts of 10% and 20%.
Health will continue to have small rises in its budget, and international aid is also protected.
news.bbc.co.uk/1/hi/uk/10500081.stm