Ministers have been accused of insulting victims after it emerged that half of convicted sex attackers, violent criminals and burglars are avoiding prison sentences.
Thousands of serious criminals have walked free from court, including 46% of paedophiles who abused children aged under the age of 13.
Some 49% of those convicted of sexual assault in 2012 - 2,324 offenders - did not receive a custodial sentence, and nor did many burglars and drug dealers.
Shadow justice secretary Sadiq Khan, who used parliamentary questions to obtain the statistics, said Government cuts were undermining the system.
"This will be an insult to many victims of crime who want to see those who committed crimes against them properly punished and rehabilitated," he told the Daily Telegraph.
Since the European Court of Human Rights ruled that whole life terms were a breach of human rights, the Government has been looking at a range of options to deal with the issue.
They now think they may have come up with a way around the ruling, by allowing judges to hand out US-style long sentences, perhaps up to 100 years. They are due to present their proposals to the Court in Strasbourg later this month.
The ECHR is an institution with which the Government is quite happy to pick a fight, and this would give Tory backbenchers another reason to ask David Cameron to take a stronger line against the court and perhaps even threaten to pull out of the European Convention.
There are currently 49 criminals serving whole life terms in English prisons, and David Cameron has vowed to ensure that "life means life" for the worst offences.
Those serving full life terms include Jamie Reynolds, who pleaded guilty to the murder of Shropshire teenager Georgia Williams last year.
Mark Bridger, who was jailed for killing five-year-old April Jones, is also serving a whole life sentence.
David Cameron has promised to ensure murderers can be kept in jail for life amid suggestions that the Government could introduce 100-year-sentences.
The Prime Minister's comments follow a long-running confrontation with the European Court of Human Rights, which has declared life sentences in England illegal because they offer no "right to review".
Ministers believe they can sidestep the ruling by letting judges sentence for hundreds of years, the Telegraph has reported.
Prisons Minister Jeremy Wright has defended the Government's Transforming Rehabilitation reforms following a report that casts doubt on the Prison Service's present capacity to accommodate them.
The Minister said the reforms are "ambitious and I make absolutely no apology for that. I want rehabilitation at the heart of what prisons do so we can reduce re-offending and better protect the public."
An inspection report of prisons in England and Wales has called for a "fundamental review" into offender management.
In a joint statement, Liz Calderbank, chief inspector of probation, and Nick Hardwick, chief inspector of prisons, said they had come to the "reluctant conclusion" that offender management model isn't working.
It is more complex than many prisoners need and more costly to run than most prisons can afford.
Given the Prison Service's present capacity and the pressures now facing it with the implementation of Transforming Rehabilitation and an extension of 'through the gate' services, we doubt whether it can deliver future National Offender Management Service (NOMS) expectations.
We therefore believe that the current position is no longer sustainable and should be subject to fundamental review.
Work done in prisons to cut re-offending is not working, an inspection report has found.
Nick Hardwick, chief inspector of prisons, and Liz Calderbank, chief inspector of probation, warned prisons in England and Wales are unlikely to deliver future expectations and the current measures are therefore unsustainable.
The report also found that when it comes to offender management measures the majority of prison staff do not understand what is required.
The report comes as the Government rolls out its Transforming Rehabilitation reforms, including plans for a nationwide "through the prison gate" resettlement service, which would see most offenders given continuous support by one provider from custody into the community.
New state-of-the-art prisons being built in England and Wales will have telephones, showers and toilets inside each cell, along with some that feature screen terminals for inmates to order meals and book activities, a National Audit Office report revealed today.
"Most importantly, in new buildings all cells have integrated screened toilets and over 90 per cent have integrated showers," the report said.
"Some new cells contain telephones (the use of which is controlled and may be monitored by prison staff) and, at HMP Thameside, terminals to book activities and order meals.
"In-cell telephones, as well as allowing prisoners to maintain family contact (important for successful rehabilitation), also contribute to prisoner safety," the report added.
Ministers have decided to keep three South Yorkshire prisons under public-sector management amid an investigation into private firm Serco which was the preferred bidder to run them, the Ministry of Justice said today.
Movies with a certificate 18 rating have been banned from jails in England and Wales as part of a clampdown on perks behind bars brought into force today.
Prisoners are to be banned from watching violent and sexually explicit films, such as Hostel and Reservoir Dogs, under changes to the Incentives and Earned Privileges (IEP) scheme.