The Government saved £10 billion in the last financial year by cutting the size of the civil service and reducing Whitehall waste, Francis Maude said.
The Cabinet Office Minister said £2.2 billion had come from cutting the numbers working in central government but money had also been saved by “getting smarter, savvier and more innovative” in the way ministries work.
Ministers hope to achieve savings of £20 billion a year by 2015, compared to 2009/10 levels.
Mr Maude said the £10 billion achieved in 2012/13 was the equivalent to £600 per working household.
“It is the salary of 260,000 nurses, it would pay for three million primary school places or the building of 700 new secondary schools,” he said.
“These savings have been achieved by reducing the size of the civil service. We have saved £2.2 billion alone in the last year.
“We are also getting smarter, savvier and more innovative in the way we work.”
The preliminary figure of £10 billion exceeds the target of £8 billion of savings in 2012/13. But Mr Maude said more needed to be done: “The very best organisations, the most efficient, continue to make efficiency savings year after year and we have a long way to go.
“It’s not going to be easy but it’s the right thing to do and we are determined to get it done.”