The decision on pay has been publicised after an unnamed cabinet minister told the Daily Mail it would be unfair for those returning to the office not to be paid more.
They told the Mail: "People who have been working from home aren't paying their commuting costs, so they have had a de facto pay rise, so that is unfair on those who are going into work.
"If people aren't going into work, they don't deserve the terms and conditions they get if they are going into work.”
However, Kwarteng said decreasing the salary of those who remain working from home would set colleagues against each other.
He said: "We shouldn't really be setting people who are working from home two or three days a week against other colleagues."
The pandemic's impact on working patterns:
Alan Price, CEO at BrightHR, said while it may seem logical to pay staff differently if their place of work changes, especially if there are no added concerns around commuting, employers should not act hastily.
He told HR magazine: “The way this issue should be approached depends heavily on the work that will be undertaken by the employee and if they will be working full-time or part-time.
“It is not advisable that employers pay staff less for working from home permanently, even on a hybrid basis, if their role will remain the same as when they were fully office-based, unless the employee agrees to it or their employment contract stipulates that such a thing can be done.”
Price said reducing pay due to a change in where an employee’s work is being carried out may be classed as an unlawful deduction from wages.
If the individual is working the same number of hours, receiving the same amount of workload or held under the same obligations as when they were in the office, they should be paid the same, he said.
“Even if the employee agrees to receive a reduction in pay, employers might end up with an indirect sex discrimination claim if it can be shown that more women work from home than men, so employers should be careful.
“Further claims of constructive dismissal can be brought if an employer has reduced an employee’s pay with no justification for doing so and the employee is forced to resign.”
Speaking on BBC Radio 4's Today programme, Kwarteng said he would be encouraging officials to return, but with a degree of flexibility
"I think flexible working is here to stay," he added, when asked whether the government wanted workers back in offices.
The PCS union, which represents lower-and-middle ranking officials, said it was holding discussions with the cabinet office on how it can embrace the post-pandemic world with hybrid working.
A PCS spokesman said: “Any attempt to dock pay for civil servants for any reason would be met with a swift industrial response, potentially including strike action.”