Solute clustering and G-phase precipitation cause hardening phenomena observed in some low alloy and stainless steels, respectively. Density functional theory was used to investigate the energetic driving force for the formation of these precipitates, capturing temperature effects through analysis of the system’s configurational and magnetic entropies. It is shown that enrichment of Mn, Ni and Si is thermodynamically favourable compared to the dilute ferrite matrix of a typical A508 low alloy steel. We predict the ordered G-phase to form preferentially rather than a structure with B2-type ordering when the Fe content of the system falls below 10–18 at. %. The B2 → G-phase transformation is predicted to occur spontaneously when vacancies are introduced into the B2 structure in the absence of Fe.