Boris Johnson wants to cut costs by slashing 91,000 positions, according to a letter to civil servants from Cabinet Secretary Simon Case.
Downing Street said it had not ruled out a recruitment freeze or compulsory redundancies as part of the cuts, which would see the civil service return to 2016 staffing levels.
There are currently 52,000 civil servant jobs in the Midlands. Sites include the Department for Levelling Up headquarters, which opened in Wolverhampton last year and includes Levelling Up Secretary Michael Gove's office.
There is also a HMRC office in Telford, while the Department for Transport has unveiled plans to open a second headquarters in Birmingham.
Wolverhampton South East MP Pat McFadden, Labour's Shadow Treasury Secretary, said: "The Government has said the relocation of civil servants is part of their regeneration efforts.
"If they are going to cut the size of the civil service by one fifth, then obviously that undermines the idea of regeneration through civil service relocation."
In his letter to civil servants, Mr Case said the job cuts would be "challenging" and that civil service staffing had grown "substantially" since 2016, partly because of the pandemic.
He wrote: "We must consider how we can streamline our workforce and equip ourselves with the skills we need to be an even more effective, lean and innovative service that continues to deliver for the people we serve."
It is understood Downing Street has ordered Government departments to put forward plans to reduce staff numbers.
The Prime Minister's spokesman said: "It's important for the civil service to be as efficient as possible and make sure there's no duplication.
"It's right that the public would expect the Government to make sure we are spending taxpayers' money as efficiently as possible."
The civil service grew from 384,000 in 2016 to 475,000 at the end of last year, a rise of nearly a quarter.