Lord Archer has called on the government and opposition parties to consider compelling prisoners to pass reading and writing tests before they are released from jail.
Lord Archer, who came up with the scheme during his two years in prison, says it could help deal with the causes of crime - and result in thousands of prisoners being returned to society without the stigma of total illiteracy.
The ex-Conservative deputy chairman outlined his views for radical changes to the prison system in his first public speech since being released from jail.
Lord Archer, formerly prisoner FF8282, was freed in July, after serving two of a four-year sentence for perjury and perverting the course of justice.
His speech at the Howard League for Penal Reform's conference in Oxford came as Lord Chancellor Lord Falconer outlined plans to strip the ex-MP of his peerage and ban him from sitting in the second chamber.
Lord Archer, 63, who is still on probation, said he believed prisoners should have to pass a test following an intensive 12-week reading and writing course before they were allowed to be considered for a job or early release.
He argued that more than 90% of inmates do not take up further education while locked up because they are only likely to be paid £5 a week for this, compared with £12 a week if they work as a gardener, cleaner or potato peeler.
Lord Archer also suggested less severe punishments for prisoners caught smoking cannabis.
Prison guidelines do not distinguish between inmates caught smoking
marijuana and those found injecting heroin.
But unlike marijuana, which leaves traces in the bloodstream for 28 days, heroin can be flushed from the body within 24 hours after drinking vast amounts of water, he said.
This resulted in some inmates turning to heroin as an alternative to puffing cannabis because they knew they were less likely to show positive at a Mandatory Drug Test.
Lord Archer said while he was against the legalisation of marijuana, he believed moves towards encouraging police to no longer arrest most people found in possession of the drug for personal use could be extended to prisons with clearer guidelines on the scale of punishment.
He also criticised the "lamentable failure" to stop drugs entering closed prisons by the "bucketload".
He told penal reform campaigners that while it is not his intention to become a prison reformer, he hoped to create "constructive debate" on a subject "that most people wish would just go away".
"After two years of incarceration, I should like to offer one or two thoughts that I hope both the government and the opposition might
consider," he said.
The peer called for urgent changes to the way inmates are categorised "high" or "low" risk.
The process takes up to four weeks, leading to people convicted of minor crimes like traffic offences sharing cells in high security jails with violent offenders and drug dealers.
He cited his own case where he spent his first three weeks at HMP Belmarsh after leaving the Old Bailey.
"Belmarsh is a category A prison, which houses terrorists, murderers,
rapists, drug barons and large numbers of GBH and ABH offenders," he said.
"I would suggest that defendants on bail for a first offence should be categorised during their trial, and if sentenced go straight to an open prison
where they would be far less likely to come into contact with hardened career
While Lord Archer attracted a large swathe of the media to his speech at the plush surroundings of the Randolf Hotel, Oxford, it is unlikely he will be able to use the House of Lords as a forum for his opinions.
Under reform plans unveiled by the government on Thursday, Lord Falconer said the intention was to strip peerages from those convicted of a criminal offence, adding that the measure would be retrospective.
The reform plans will also see the remaining hereditary peers axed from the House of Lords.
Lord Archer was jailed after the jury at his trial found he had lied under oath during his 1987 libel case against the Daily Star over allegations he had had sex with a prostitute.