Only women who commit serious or violent offences and are a danger to the public should be jailed, a prison reform charity has said.
Women make up 6% of the prison population in England and Wales
Less than 10% of the 4,400 women held in English and Welsh jails would be imprisoned under such a policy, the Howard League for Penal Reform said.
It said offenders should be encouraged to change, with those making amends being given community penalties.
The number of female inmates has almost trebled from 1,580 in 1993.
A quarter of deliberate self-harm incidents in prisons involve women, even though they make up just 6% of the prison population.
They also made up 13.5% of prison suicides in 2004 - 13 out of 95.
"Women are being sent to prison in unacceptable numbers and are suffering disproportionately when they are inside," Howard League chief Frances Crook said.
"Even the government recognises that this is not a consequence of increased crime amongst women but rather greater severity by the courts."
Around half of women sentenced to prison are convicted of theft, handling, fraud or forgery, the league said.
Ms Crook said: "Prison custody for women should be virtually abolished so that only those women who are convicted of serious and violent offences and who represent a continuing danger to the public should be held in custody.
"For other women offenders, community-based interventions that make amends for the wrong done and encourage women to change their lives offer the best chance of creating a safer society."
A Home Office spokesman said: "It is the responsibility of the courts to decide the appropriate sentence for any offender.
"If the offence is so serious that custody is the only appropriate punishment, then they must send the offender to prison irrespective of whether the offender is male or female. Custodial sentences are not given without proper consideration."
He added that the government was running the Women's Offending Reduction Programme to offer a "distinct response" to the "complex range of factors" behind their criminal behaviour.
These factors could include substance abuse, mental health problems, housing or childcare issues, history of abuse, poverty, lack of education or employment.
"The intention is not to give women offenders preferential treatment, but achieve equal outcomes for women by responding more appropriately to their offending behaviour and rehabilitation needs," the spokesman said.
The Howard League will present its proposals to the United Nations Congress on Crime Prevention in Bangkok, Thailand, next month.