The idea is for GPs to spell out those tasks workers are able to perform rather than the traditional "sick note" focusing on what they cannot do.
There will also be more support to help people back to work with firms encouraged to promote healthier living.
A report in March warned ill-health was costing the economy £100bn a year.
Returning to work
Ministers have accepted recommendations made by government health advisor Dame Carol Black that the system of GPs issuing sick notes, in place since 1948, should be overhauled.
Trials replacing paper notes with electronic fit notes are underway and, if successful, the new system could be in place by 2010.
The new fit notes, outlining what duties an employee could do, would be passed on to employers if he or she agreed.
They are intended to form part of a package of support offered by employers and health professionals to help staff with health problems stay in work and to return to the workplace as soon as possible.
Carol Black's report highlighted the impact on economic productivity of improving occupational health and reducing the number of people, currently more than 2.7 million of whom, are on incapacity benefits.
Unions have long complained that there is insufficient support for people unable to work due to sickness or injury.
Health Secretary Alan Johnson, who has also announced a review of the health of NHS workers, said he wanted to help encourage people off work to return as "soon as possible".
"Helping people stay in work doesn't just have an economic imperative," he said.
"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."
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