Criminal defendants living in households with a disposable income of £37,500 or more are to be stopped from automatically accessing legal aid under new proposals.
The cap is one of a number of reforms put out to consultation by Justice Secretary Chris Grayling that are aimed at slashing the criminal legal aid bill by £220 million.
Prisoners' rights to legal aid would be curbed, while the reforms could also pave the way for lawyers to compete for contracts.
Mr Grayling said: "We have an excellent tradition of legal aid and one of the best legal professions in the world. But we cannot close our eyes to the fact legal aid is still costing too much. It is not free money, it is paid for by hard-working taxpayers, so we must ensure we get the very best value for every penny spent."
The consultation was launched as Mr Grayling also called for measures that would see criminals pay for the cost of running courts out of their future earnings.
Offenders can already be required to make payments to victims, the courts or other Government agencies through a range of orders and fines, but there is currently no power to make them pay directly towards the running cost of the court.
Criminal legal aid costs taxpayers more than £1 billion every year, said the Ministry of Justice.
Among the reforms put out for consultation, the Government also wants to clamp down on the small number of high cost cases that swallow millions of pounds in public money. A residency test has also been proposed to ensure legal aid does not go to immigrants who have only recently arrived in the country.
But solicitors hit out at proposals to introduce competition for legally-aided advice and representation.Lucy Scott-Moncrieff, president of the Law Society, which represents solicitors in England and Wales, said: "In several previous attempts, the Government has been unable to come up with a workable model for price tendering, and we do not see how they will be able to address the fundamental difficulties this time round."
However, the proposals would not cover crown court advocacy - a move welcomed by barristers.