Osborne claimed the move would save £3 billion and make Britain "fairer" for those in work.
Benefits affected include Working Tax Credits and Jobseeker's Allowance. Pensions, disability and maternity benefits have been ring-fenced and will not be affected by the freeze. He also announced that restraints on public sector pay will be extended to 2017.
The chancellor claimed in his speech to the Conservative party conference that benefits rose at a faster rate than wages during the recession. He stated that this situation is neither "fair nor sustainable".
"This freeze on working-age benefit saves the country over £3 billion. It's a serious contribution to reducing the deficit," he said. "And to those in work I say this. Where is the sense in taxing you more only for you to be given some of your own money back in welfare?
"The best way to support people's incomes is to make sure those out of work get a job and those in work pay less tax."
Chris Leslie, Labour's shadow chief secretary to the Treasury, accused Osborne of "failing to balance the books" during his term in office.
"While working people have seen their wages fall by £1,600 a year since 2010, the Tories have once again shown they are the party of a privileged few at the top," he said.
