Labour will abolish most prison sentences of under 12 months and bring in tougher community punishments under plans to ease the overcrowding crisis in England and Wales.
A sentencing bill due next month will mark the biggest shake-up in three decades, with Justice Secretary Shabana Mahmood warning prisons could run out of space again by summer.
Thousands of inmates were released early after Labour took office last year to free up capacity.
The reforms will end almost all short jail terms, which ministers say drive reoffending. Recent figures show 62% of offenders released from sentences of less than a year go on to commit new crimes.
Prisoners serving fixed terms will instead be able to earn early release for good behaviour under a progression scheme modelled on a system in Texas. Those convicted of terrorism and the most dangerous offenders will be excluded.
Community punishments will be toughened, with judges able to impose larger fines, asset seizures and bans on driving, travel and football matches. More offenders will be put to work on local projects such as filling potholes and cleaning graffiti.
Other measures include longer suspended sentences of up to three years, tighter monitoring of violent and sexual offenders through tagging and “restriction zones”, and the immediate deportation of most foreign criminals on conviction. A pilot scheme for chemical castration of sex offenders could also be extended.
A government spokesperson said ministers had “inherited a prisons system days away from collapse” and warned that without action, courts could be forced to halt trials and police to cancel arrests.
England and Wales have the highest prison population per capita in western Europe.