Balls said 129,400 people would currently be helped by the plan, which would be entirely paid for by limiting tax relief on pension contributions made by the 2% of UK earners with incomes of more than £150,000 a year.
Under Labour's plan, the long-term unemployed would be offered 25 hours of work a week at the national minimum wage for six months.
Anyone who fails to take up the offer under the £1 billion scheme would risk losing their benefits.
Balls said: "A One Nation approach to welfare reform means Government has a responsibility to help people into work and to support those who cannot.
"But those who can work must be required to take up jobs or lose benefits as a result - no ifs or buts.
"Britain needs real welfare reform that is tough, fair and that works, not divisive, nasty and misleading smears from an out-of-touch and failing government."
Shadow work and pensions secretary Liam Byrne said the Government's universal credit scheme had become "universal chaos".
He said: "George Osborne's last Budget was such a disaster that more than a third of a million extra people are now forecast to join the dole queue."