The government will replace sick notes with electronic fit notes in an attempt to get people back to work quickly after a period of illness.
Recommendations made by Dame Carol Black have been approved, which include general practitioners (GPs) telling employers what jobs unwell staff can still do.
According to the Confederation of British Industry (CBI), 172 million working days were lost in 2007 due to sickness absence.
Health secretary Alan Johnson said time away from work due to illness costs an estimated £100 billion per year but helping people stay in work does not just have an economic imperative, it has a moral and social one too.
"Poor health can prevent people fulfilling their potential, leaving them more likely to slip into poverty and social exclusion," he added.
The proposals to replace paper sick notes with electronic fit notes will be tested at 500 GP practices and the new system could be in place by 2010.
Sickness days are often caused by stress and half of women are suffering from sleepless nights due to pressure in the workplace, a survey by the British United Provident Association shows.