The Labour leader warned major changes will be needed to “cut the costs of failure in the system” as the party works up its plans to wipe out the deficit by 2020.
Writing in The Sun on Sunday, he also dismissed criticism of Labour’s plans to bring back the 50p top rate of tax - announced earlier today - insisting the move would not stop the wealthiest “working hard”.
Labour is seeking to retake ground on the economy by demonstrating its fiscal discipline following growth forecasts that are favourable for the Coalition.
It has previously announced plans to strip wealthier pensioners of winter fuel payments and indicated social security spending will have to be cut but Mr Miliband is warning that “big reforms” will be needed.
He wrote: “If we are to tackle the deficit, we also have to do more to control social security spending. That means making tough choices this Government has ducked, such as scrapping the winter fuel allowance for the richest five per cent of pensioners.
“But to deal with welfare spending properly, we will need to make big reforms to cut the costs of failure in the system.”
Shadow chancellor Ed Balls pledged that earners on more than £150,000 would pay more income tax as part of a Labour government’s plan to balance the books.
Business leaders have warned that re-introducing the 50p income tax rate would put Britain’s economic recovery at risk but a poll carried out for The Mail on Sunday showed the move was popular with voters.
The Survation study for the newspaper found six out of ten adults backed the move and 40% disagree that it will make the rich leave Britain.
But the research also found that 57% do not believe Mr Balls will meet his pledge to balance the books in the next parliament.
Figures released by HM Revenue and Customs showed that top earners paid £9.5 billion more in total income tax liabilities when the rate was set at 50p than previous analysis had shown, Labour said.
Simon Walker, director general of the Institute of Directors, claimed the move would “significantly damage Labour’s credibility” in the business community.
Rob Templeman, chairman of the British Retail Consortium, said: “This tax increase would be bad for business in Britain. It would put the recovery at risk, deter investment and ultimately cost jobs.”
Financial Secretary to the Treasury Sajid Javid said: “It’s the same old Labour - they haven’t changed and they have no long-term economic plan for the future.”
Liberal Democrat Chief Secretary to the Treasury Danny Alexander said: “Labour’s hypocrisy on taxation is breathtaking. In government they left a system full of loopholes for the wealthy to exploit.”
But in his article for The Sun on Sunday, Mr Miliband hit back, writing: “Last year, when the cost-of-living crisis was eating into family budgets and pensioners’ savings, the Government decided that the people who needed a tax cut most were millionaires.
“David Cameron and Nick Clegg said it was right to cut the top rate of tax for the top one per cent of people, earning more than £150,000 a year. Since then, anyone earning £1 million has had a tax cut worth £100,000 this year and they will get that every year it remains in place.
“Ed Balls announced that the next Labour government will reverse this Government’s tax cut for millionaires. George Osborne will try to tell you that won’t raise much money because big earners will find ways to avoid paying the top rate.
“But official figures show that £10 billion more was raised over the three years the 50p rate existed than the Government thought at the time it was abolished.
“I don’t believe taxing people with income above £150,000 at the 50p rate will stop them working hard and contributing.
“Nor do I accept the Conservative idea that says it is only worth helping those at the top because they are the only ones who create any wealth.
“Labour knows that success is built by millions of hard-working people on low and middle incomes, as well as the highest earners.”
Mr Miliband also accused Prime Minister David Cameron of trying to “pull a Derren Brown” in the row over the cost-of-living crisis.
He wrote: “Like the TV illusionist, he wants you to believe something unbelievable.
“He declared that there isn’t a cost-of-living crisis, that it doesn’t exist but you know what is happening in your life.
“And you know that your wages have been squeezed year after year and bills are going up and up.
“When Mr Cameron uses some dodgy statistics and a graph he has seen on George Osborne’s office wall to claim everything is fixed, he just shows how much he doesn’t get it.”