The Daily Telegraph reported workers would be ranked by performance and the worst employees fired.
The overhaul is likely to fuel anger in the public sector, which has seen recent strikes by unions, the newspaper said Friday.
Government departments would be required to perform like private companies and rank their employees through assessments. The proposed changes would cover all 434,000 civil servants.
"It is a myth that you can never sack a civil servant," Cabinet Office Minister Francis Maude was quoted as saying. "It is not easy to sack anyone, nor should it be. But it is no more difficult in the civil service than it is anywhere else, on performance grounds."
Maude said civil servants are frustrated the worst performers face no repercussions and the hardest workers receive no recognition.
The Telegraph said Prime Minister David Cameron has agreed that action is needed to raise standards.