The cross-departmental study will be one of four reviews which form part of the 2003 spending review, the year-long process that sets government spending priorities for the next four years.
The latest review follows the 2001 Treasury review of charities in public services, which led to the £125 million futurebuilders fund to facilitate greater involvement by the not-for-profit sector.
The new review will examine sector involvement in health and social care, crime and community cohesion, education and employment, housing and homelessness and children and families.
Stephen Bubb, chief executive of ACEVO, said: "The last cross-cutting review was extremely valuable; it was the first drawn on people from outside Whitehall.
"There is much more scope for public services to be outsourced to the not-for-profit sector."