Its 'Sustainable Future for Legal Aid' paper (15-page / 216KB PDF), which sets out how legal aid will be provided over the next three years, will also introduce means testing into criminal legal aid applications for the first time.
Under the proposals, financial assessment will relate to a much longer period than the week before the case is heard. "Those who are able to pay higher contributions [will] do so" over a longer period depending on the cost of the case.
The use of alternative sources of funding, including legal expense insurance and conditional fee agreements, will also be encouraged leaving legal aid as a "funder of last resort".
A full review looking at alternatives to public funding in civil cases is already underway and a consultation will be issued shortly, the Scottish Government said.
It said that its proposals would "maintain public confidence at an affordable and sustainable level of expenditure".
Legal aid allows people who could not otherwise afford to do so to have legal representation using Government funding. The legal aid fund in Scotland is administered by the Scottish Legal Aid Board (SLAB).
Although the majority of legal aid funding is spent on criminal cases, civil expenditure amounted to £52.1 million in 2010-11 according to Scottish Government figures.
Applications for civil legal aid in Scotland reached record levels last year, the Scottish Government said.
Financial eligibility for legal aid in civil trials was increased in 2009 so that those with disposable incomes of up to £25,000 could qualify. 70% of the Scottish population now qualify financially for some form legal aid in civil cases, according to Scottish Government figures.
Justice Secretary Kenny MacAskill emphasised that the current economic climate should not undo the work of the profession and SLAB.
"Despite the challenge imposed through significant budget cuts from Westminster, the Scottish Government has been - and remains very firmly - committed to maintaining and improving access to justice," he said.
"This paper sets out a range of proposals that we believe can protect access to justice, while delivering efficiencies and savings that will ensure the long-term integrity of the legal aid system. We will now discuss these proposals in detail with stakeholders."
"Much of the Scottish Government's proposed reforms seem sensible in principle but as always, the devil will be in the detail and we will need to look carefully at how any changes will work in practice," said Cameron Ritchie, president of the Law Society of Scotland.
The changes on civil legal aid raise issues "particularly whether instructing solicitors should be present in court or not and on travel costs for certain types of work," he said.
"We recognise that the legal aid budget, like all government budgets, will be affected by the reductions in public expenditure. However, we need to strike the right balance that protected the interests of the public and solicitors, who are essential to make any system of legal aid work successfully," he said.