The controversial benefit reform, Universal Credit, which replaces other benefits such as jobseeker's allowance, income support and other tax credits, will be introduced in four local jobcentres in selected areas of Ashton-under-Lyne, Oldham, Warrington and Wigan.
People who live in Ashton-under-Lyne will claim the new benefit from Monday while in the other three areas other elements of Universal Credit will be trialled.
Work and Pensions Secretary Iain Duncan Smith said: "Universal Credit is nothing less than the start of a fundamental cultural shift of the welfare system.
"This will revolutionise the way people experience the welfare state. It will make it easier for people claim what they are entitled to, but more importantly it will make it easier for people to move off benefits and into work.
"This is the first step on a long journey and the pathfinder is our opportunity to get Universal Credit right.
"We will bring in this radical and vital reform in a careful and controlled way."
But the Public and Commercial Services (PCS) union, which represents staff in jobcentres, said it will stage a protest at Ashton-under-Lyne, adding that the Government should rethink Universal Credit and prioritise creating jobs and supporting people into them instead of "demonising" those out of work and entitled to benefits.
The union also announced that about 1,500 of its members who work for Hewlett Packard on government contracts, including the Department for Work and Pensions, will strike today in a dispute over cuts to jobs and pay.
Minister for Welfare Reform Lord Freud said: "The start of Universal Credit today is a big step forward.
"We are finally implementing a benefit system that is fairer, where claimants will be better off in work than on benefits.
"We are introducing Universal Credit in a slow and safe manner so that we get this important reform right and help more people move smoothly from benefits and into work."
The so-called pathfinder will run from today through to the start of a progressive national roll-out from October, with completion due in 2017.
The first claimants to Universal Credit will be single jobseekers. Around 7,000 people are expected to get Universal Credit during the pathfinder period.
PCS general secretary Mark Serwotka said: "If universal credit was being introduced to genuinely make life easier for people entitled to benefits it would be commendable, but the government's pernicious language exposes its real intent is to demonise and punish them.
"We have shown that ministers are prepared to mislead and misdirect to drive through their welfare cuts, so we are challenging Iain Duncan Smith and others to prove what they claim is true.
"The next time a minister says people are better off on benefits than in work, give them a pen and paper and ask them to show you how."
Universal Credit will replace income-based jobseeker's allowance, income-related employment and support allowance, income support, working tax credit, child tax credit, and housing benefit.