Mr Laws said the public sector's share of the economy should be cut to 35% from the 49% it reached in 2010-11.
It needed to be "back in kilter with the amount of tax people are prepared to pay", he told the Sunday Telegraph.
His call goes further than that of Commons Treasury committee chairman Andrew Tyrie who wants a 40% share.
Mr Laws resigned as chief secretary to the Treasury two years ago after admitting he claimed expenses to pay his partner rent.
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