Britain will extend its job-protecting furlough programme until the end of September and increase support for the self-employed, finance minister Rishi Sunak will announce in a budget speech on Wednesday.
The one in five private-sector employees covered by the furlough scheme will continue to receive 80 per cent of their salary for hours not worked.
But employers will have to start contributing to the cost as the economy reopens from lockdown, paying 10 per cent of the hours their staff do not work in July, rising to 20 per cent in August and September, the ministry said.
"Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK," Mr Sunak was due to say in his budget speech to Parliament, excerpts sent to media by the finance ministry say.
"There's now light at the end of the tunnel with a roadmap for reopening, so it's only right that we continue to help business and individuals through the challenging months ahead and beyond."
The Coronavirus Job Retention Scheme had been due to expire at the end of April, raising fears of a sharp jump in unemployment at a time when the economy is still likely to be struggling under the weight of coronavirus restrictions.
The Confederation of British Industry welcomed the move.
"Extending the scheme will keep millions more in work and give businesses the chance to catch their breath as we carefully exit lockdown," CBI chief economist Rain Newton-Smith said.
The scheme will cost £70 billion ($98bn) between its launch in March last year and the end of April, estimates last month by the National Institute of Economic and Social Research showed.
Mr Sunak is also due to announce on Wednesday that another 600,000 self-employed workers will become eligible for government support.
Until now the government had only allowed applications from workers who were self-employed in the 2018-2019 tax year.
But eligibility for the Self-Employment Income Support Scheme will be expanded to those who first reported being self-employed in 2019-2020.
A fourth grant for the self-employed will be available from next month worth 80 per cent of three months' average trading profits up to £7,500 in total.
Details of a fifth grant would be provided on Wednesday, the ministry said.
