Tens of thousands of people claiming the main benefit for long-term sickness will no longer face repeated medical assessments to keep their payments.
Work and Pensions Secretary Damian Green said it was pointless to re-test recipients of Employment and Support Allowance (ESA) with severe conditions and no prospect of getting better.
More than two million people receive ESA, which is worth up to £109 a week.
The change has been welcomed by campaign groups.
The reform will be unveiled at the four-day Conservative Party conference, which begins in Birmingham on Sunday.
Michelle Mitchell, head of the MS Society, described it as a “victory for common sense”.
She added: “Frequent reassessments for people with progressive conditions like MS are too often a waste of time and money; they can leave people with uncertainty and fear of having their support taken away.”
Applicants for ESA have to undergo a work capability assessment to find out if they are eligible and they are re-tested to ensure their condition has not changed. Some are re-tested every three months and others up to two years later.
Illnesses such as severe Huntington’s, autism or a congenital heart condition are among those that are likely to qualify for continuous payments without reassessment. The criteria will be drawn up with health professionals.
Mr Green said a “key part” of making sure those who are unable to work receive “full and proper support” includes “sweeping away any unnecessary stress and bureaucracy”.
‘I find assessments frustrating and annoying’
Andrew Grantham has claimed ESA for seven years and told the BBC having to be reassessed was frustrating and annoying.
“I’ve had MS since 2006… it’s chronic, fluctuating and the only guaranteed thing about it is that it will get worse.
“I’ve had three assessments and I will have one next year. The first time I was found fit for work and I had to go to a tribunal.
“The other two assessments I had some really good medical evidence from my dedicated nurse and I was found not fit for work.
“These assessments are stressful for people because they don’t know which way it is going to go. There is also a chance that you lose your financial security and you are told that you are fit for work and you have to look for work.”
Mr Green told the BBC: “Having looked at the whole system there is some activity we do that is just pointless.
“If you have got a condition that has made you unfit for work and which can only stay the same or get worse, I think it is just pointless… to just bring someone back again.
“It’s the severity of the condition that matters, because indeed there are some people with MS… that can work, but we know that it’s a degenerative disease so there will come a point when it may well be that they can’t work.
“After that it seems to me that re-testing and reassessing them doesn’t do them any good – it might induce anxiety and stress in them – and it is also not doing the system any good because it is pointless.”
Currently, those in the “work-related activity group” – deemed unable to work at the moment but capable of making some effort to find employment – receive up to £102.15 a week in ESA payments.
Those in the “support group” – deemed unable to work and not obliged to do anything to improve their chances of finding work – receive up to £109.30 a week.
‘Fear of employment’
However, ministers remain committed to a cut to be introduced next April in the amount of money that some new recipients of ESA will receive, BBC social affairs correspondent Michael Buchanan says.
From April 2017, payments will fall to £73 for new claimants in the “work-related activity” category as ministers argue that too few people in the category are moving into work.
Keran Bunker, an ESA claimant who is on the autistic spectrum and has ADHD, told the BBC that the change would make people “fear trying to find employment”.
Mr Bunker said he would fear losing out if he took a job which he later might lose because of health issues, returning to the lower level of benefit.
The former work and pensions secretary, Iain Duncan Smith, welcomed the “progressive” reform to the re-testing regime, which he had set up when in office.
“I hope that the government will… move on to the fuller reform, what we called the health and work programme, where we lock together with the health department much more to be able to get a better health assessment of people, rather than a just strictly work assessment, which was really one of the great reforms I wanted.”