Army reservists are to be given £40m of new kit and more overseas training, Defence Secretary Philip Hammond is expected to announce later.
He will say 68 reserve units will be formed and paired with regular units.
It is part of a long-term plan to cut the size of the regular Army from 102,000 to 82,000 while increasing reservist numbers by 15,000 to 30,000.
Critics say it is an attempt to create "an army on the cheap". Mr Hammond insists savings had to be made.
BBC defence correspondent Caroline Wyatt said the Territorial Army was being renamed the Army Reserve because the government was keen to ensure reservists could serve more closely alongside their regular counterparts.
The MoD and the Army have both invested much time and energy working out how to make the best of a difficult financial situation.
The plans are ambitious and will require a change, not just in the structure of the Army, but also in the UK's attitudes to its reservists - not least the attitude of local communities and employers, whose support in this will be vital.
The government will offer financial incentives to smaller businesses, to encourage them to allow staff to join up. But the recession means that some may remain reluctant to employ staff who will need to spend more time in training and could be mobilised for at least one year in every five.
The changes could be seen as an opportunity to modernize and renew the Army for the 21st Century or as a recipe for uncertainty and demoralisation for regulars.
The government is expected to give reserves more hi-tech equipment this year, including upgraded SA80 rifles and night vision kit as well as improved training and more opportunities to train abroad.
Some £80m is to be invested in the depots and training grounds of the 68 new units.
The proposals will also aim to offer employers greater predictability over the call-out of reservists and will set out the level of financial incentives for small firms that employ them.
And reserve units will be paired with regular units from 2015, with more joint training.
A Ministry of Defence source described the plans, which include a government commitment to spending £1.8bn over 10 years to transform the reserves, as "a radical overhaul".
In April, Tory MP Col Bob Stewart suggested someone at the MoD was "smoking a lot of dope" to believe it would be possible to deploy 30,000 reserve troops.
He said some reservist soldiers would be unable to deploy because it was "inconvenient".
"The government, my government, is trying to get as inexpensive an army as possible... an army on the cheap," he said.
Mr Hammond, who says employers are critical to "making this work", said: "Having a standing army is very expensive.
"Having reserves who are able to deploy in the fourth and fifth turn of an enduring operation like Afghanistan gives us extra flexibility and it does make financial sense."
The latest plans come as a result of the almost 8% cut to the MoD budget announced in 2010.
The MoD aims to reach its target of 82,000 regular soldiers by 2017 while the number of reservists is to increase from 15,000, in 2010, to 30,000 in 2018.
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