By grace through faith in Jesus Christ we receive a new heart and are made children of God. And by faith we receive Christ's finished work for us. We were buried "with him through baptism unto death: that like as Christ was raised from the dead through the glory of the Father, so we also might walk in newness of life" and having "become united with him in the likeness of his death, we shall be also in the likeness of his resurrection" (Rom. 6:4-5). By faith we receive the benefits of Jesus's victory over sin and death, "knowing this, that our old man was crucified with him, that the body of sin might be done away, that so we should no longer be in bondage to sin; for he that hath died is justified from sin" (Rom. 6: 6-7).
And we have been set apart from sin and death unto God through faith in Jesus's work alone, "knowing that Christ being raised from the dead dieth no more; death no more hath dominion over him. the death that he died, he died unto sin once: but the life that he liveth, he liveth unto God. Even so reckon ye also yourselves to be dead unto sin, but alive unto God in Christ Jesus." (Rom. 6:9-11). Our past sinful life and its cursed destiny has been wonderfully preempted by Jesus' substitution for us on the cross, in that he bore the penalty of death for the guilt and shame of our sin. And in exchange we, by faith in him, have been set free from the dominion and authority of sin. That cursed link between our sin and death has been broken by Jesus' death in our place. So Paul writes that we are to accept as certain that we are "dead unto sin [its penalty and reign], but alive unto God in Christ Jesus." (Rom. 6:11). This benefit we also receive through faith.
Good news upon good news received by the weary sinner simply through faith in the Lamb who was slain. And there is more. Paul then authoritatively declares that "sin shall not have dominion over you: for ye are not under law, but under grace" (Rom. 6:14). Sin's death penalty has been paid. It no longer hangs over blood-washed sinners. Again Paul writes, "The sting of death is sin; and the power of sin is the law" (1 Cor. 15:56). Trusting in Christ alone we have been delivered from the curse and condemnation of the law through which sin had dominion. No longer under the judgment of the law believers are under the gift of grace. The wages of our sin have been paid by Jesus. Whereas we owed a debt payable only by death, we now have the free gift of God, eternal life in Christ Jesus; "for by grace have ye been saved through faith; and that not of yourselves, it is the gift of God; not of works, that no man should glory." (Eph. 2:8-9).
The question I would then pose is the same one that Paul asked the Galatians. "Received ye the Spirit by the works of the law, or by the hearing of faith?... He therefore that supplieth to you the Spirit, and worketh miracles among you, doeth he it by the works of the law, or by the hearing of faith?" Gal. 3:2,5). This is generally understood to be pertaining to justification and it is. But it seems to me that Paul is making a larger point. That when we bring a works-merit-basis into our Christina life we move away from the ground of grace not only in our justification but of salvation itself. So, I think the principle of faith alone in Christ alone by grace alone holds in sanctification as firmly as it does in justification. But what about doing good works? Aren't they a means of sanctification? Actually, I think it's the other way around. Our sanctification is by grace, and so is the means of dying to sin and doing good works.
Q. 35. What is sanctification? A. Sanctification is the work of God's free grace, whereby we are renewed in the whole man after the image of God, and are enabled more and more to die unto sin, and live unto righteousness. [Westminster Shorter Catechism](Scripture references are from the American Standard Version)