Under the plan 18-21 year olds will only get Jobseeker’s Allowance if they already have the skills to get a job.
Other changes will see higher rates of Jobseekers’ Allowance for people who have been in work for five years.
The pledges come as comments from Lord Mandelson – and polls – raised new leadership questions about Mr Miliband.
Asked on the BBC’s Newsnight, whether he thought Mr Miliband was the best leader the party could have, Lord Mandelson said: “He is the leader we have and the leader I support and someone who I believe is capable of leading the party to victory”.
The former business secretary criticised the Labour leader for not being “strong enough” in opposition and said he had “a year to get it right”.
A YouGov poll for Prospect magazine suggested more voters believe David Miliband would make a good prime minister than his brother Ed, who beat him in the contest for the job in 2010.
Labour has consistently led the Conservatives in the polls over recent years but the public’s perceptions of its leader are more negative than those of David Cameron, prompting concerns among supporters that Ed Miliband may drag his party’s vote down in next year’s general election.
Mr Miliband’s speech announcing a series of measures aimed at making work pay in a speech to the Institute for Public Policy Research (IPPR) think tank is being seen as hitting back at critics who believe the party is too soft on welfare.
If he becomes prime minister next year, Mr Miliband says he will end entitlement to adult out-of-work benefits for 18-to-21 year olds who are not in training or further education.
Exceptions will include those already with the qualifications they need to secure “decent jobs”, as well as those with very young children or disabilities which prevent them preparing for work.
Young people from low income families will be able to claim a “youth allowance” if they agree to undertake vocational training of AS-level or equivalent. At the moment, they are prevented by benefit rules from training while looking for work.
The new allowance is expected to be paid at the same £57 level currently given to under-25s on Jobseeker’s Allowance.
But it will be means-tested so those with a family income of more than £42,000 a year will not be entitled to the new allowance. The policy is expected to affect about 100,000 young people.
He will also propose an increase in Jobseeker’s Allowance from £72 to £100 a week for those who had been in work for the previous five years.
The Labour leader wants to extend the contributory principle on which the welfare state was founded.
“It is a principle deeply felt by the British people that people should get something back for all they have put in and not get something for nothing,” he will say in his speech.
“We must reshape our social security system so that it does everything it can to get people into decent jobs and the world of work, not a life on benefits.
“And yet the perversity of the system means that the one thing we most discourage those young people from doing is getting the skills they need for a decent career.”
He will claim the proposed changes will come at no extra cost to the taxpayer – the title of the speech is “big changes, not big spending”.
But the Conservatives claimed the plans were “just a recipe for more spending on welfare, more borrowing – and more taxes to pay for it”.
Party chairman Grant Shapps said Mr Miliband was offering “more of the same old Labour and Britain would have a less secure future as a result”.
Mr Miliband has already announced his party’s “jobs guarantee” scheme, under which 18 to 24-year-olds out of work for a year will be offered a taxpayer-funded job for six months – with those who refuse losing benefits.
The PCS union – the sixth largest in the UK – has described Mr Miliband’s plan as “thoroughly depressing”.
A spokesman said: “People looking to Labour to offer opposition to this government’s cruel welfare policies will find this thoroughly depressing. If young people need training they should be given it.”
The PCS is not affiliated to the Labour Party.
At the 2013 Conservative Party conference, PM David Cameron suggested benefits paid to people under the age of 25 could be cut in an effort to reduce long-term worklessness.