Dozens of reservist bases are to close across the country as the Government frees up funding for a major expansion of numbers.
Defence Secretary Philip Hammond unveiled plans to recruit an extra 12,000 part-timers to bolster the armed forces, promising new pension, healthcare and leave perks worth thousands of pounds.
But in future, the 35,000 fully-trained reservists will be concentrated into 25 fewer bases, with 38 earmarked for closure and 13 being opened at new locations.
Better-paid civilians also face being frozen out of serving in front-line roles, as the Government has decided it will no longer make up the difference between army wages and their normal salaries.
The package, announced by Mr Hammond in a statement to MPs, will see the Territorial Army renamed the Army Reserve, with numbers rising from 20,000 to 30,000 by 2018.
The shake-up is expected to cost around £1.8 billion over the next decade, with the reservists undertaking 10% more training and getting better equipment.
Smaller firms that employ part-time troops will receive an extra £500 per month when they are away on deployment, and there will be more notice given before individuals are mobilised. The Government could also introduce a recognition scheme for businesses deemed to be military-friendly.
However, companies that discriminate against staff who want to serve will be more open to action at employment tribunals - and ministers have not ruled out legislating to ensure it is not a disadvantage when applying for jobs.
The White Paper proposals come nearly three years after the coalition said it would be reducing regular army numbers from 100,000 to 80,000.
Mr Hammond told the Commons that the changes were "key" to ensuring Britain has the military capability it needs in the coming years.