Retailers have attacked a plan which would see most people who are arrested for shoplifting avoid a jail term.
Some shoplifters can already be given instant fines
The Sentencing Advisory Panel suggested jail should be reserved for cases with "aggravating" factors such as violence.
The British Retail Consortium said the plan would give would-be thieves the "wrong message" on an offence which cost the UK £588m in 2004.
The panel also suggested an alternative plan - to jail "seriously persistent" shoplifters for up to eight weeks.
'Licence to take'
In its first plan, the panel, which is seeking views on both proposals, said the top sentence should normally be a "high-level community order".
SENTENCING ADVISORY PANEL
An independent body which is required to consult widely on possible changes to sentencing.
The 15 members are appointed by the lord chancellor, in consultation with the home secretary and lord chief justice.
They include former judges, magistrates, academics, senior police officers and prison governors
Their recommendations are sent to the Sentencing Guidelines Council, which advises courts on sentencing
Richard Dodd, of the British Retail Consortium which represents 85% of retailers in the country, said it was "disgusted" by the plan.
"It is like offering a licence to people to go into stores and take things without paying," he said.
But pressure group SmartJustice, which campaigns for alternatives to custody, says most jailed shoplifters re-offend after being released.
"You've got to look at is why these people are committing these crimes," said SmartJustice's Sinead Hanks.
"It's mainly for drugs. We support the use of drug rehabilitation... to stop them offending in the first place."
The proposals come as the prison system in England and Wales is nearly full.
The Sentencing Advisory Panel is a government-appointed body which recommends sentencing changes to the Sentencing Guidelines Council.
Its report recognised that the "no jail" option would be a "radical departure" from the present practice.
"The most severe sentence for a standard offence of theft from a shop would be a high-level community order, even where an offender may have failed to comply with such an order in the past," it added.
Factors which could lead to a custodial sentence included using violence, operating in gangs, using children to commit the offence or targeting vulnerable victims.
A second option would allow jailing for a standard offence when committed by a "seriously persistent" offender.
Responses to the paper can be made up to 16 November, before the panel considers its final report.
The BRC said the cost of the offence worked out as adding £1 on the weekly shopping for every household in the country.
"It is not a victimless crime," Mr Dodd said.
Shadow home affairs minister Edward Garnier called the panel's proposals "a significant softening" of the punishment for shoplifting.
And Liberal Democrat home affairs spokesman Mark Hunter called for a "better system of public service sentences" for offences such as shoplifting such as litter-picking and cleaning up graffiti.
In 2004, 61,670 adults in England and Wales were sentenced for shoplifting, with about 21% of them jailed.
Since November 2004, police have been able to deal with shoplifting cases up to the value of £200 with on-the-spot fines. Just over 14,000 fines were issued in the first nine months of 2005.