Pentagon officials have said their furloughs would be structured so that nearly all 800,000 civilian workers lose one day of work per week for 22 weeks, probably starting in late April. That means they would lose 20 percent of their pay over that period.
The Pentagon has begun discussing details of the furloughs with defense worker union officials.
President Barack Obama has exempted military personnel from furloughs.
House Speaker John Boehner put the blame on Obama and said he agrees with Panetta that automatic spending cuts would devastate the military.
Boehner released a copy of Panetta's letter formally notifying Congress that the Pentagon will have to consider furloughing a large portion of its civilian workforce if sequestration kicks in.
"The furloughs contemplated by this notice will do real harm to our national security," Panetta wrote in his congressional notification letter, adding that it would make troops less ready for combat and slow the acquisition of important weapons.
"Overall, sequestration will put us on a path toward a hollow force and inflict serious damage on our national security," Panetta wrote.
The only civilian Pentagon workers who would be exempt from furloughs would be Senate-confirmed political appointees such as the defense secretary and deputy defense secretary, as well as a relatively small number of workers deemed essential to protect the safety of defense property and personnel.
Panetta said the administration is still working with Congress to avoid automatic budget cuts by reaching agreement on a deficit reduction plan.