By Hannah Goff
BBC News Online politics staff in Bournemouth
Young offenders under the age of 14 would no longer face criminal trials under plans adopted by the Liberal Democrats.
The Liberal Democrats would raise the age of criminal responsibility
Calls for "all under-14s who commit crime" to be dealt with by education and social services were agreed at the party conference in Bournemouth.
It also pledged to raise the age of criminal responsibility from 10 to 12.
The changes would have meant the boys who killed Liverpool toddler Jamie Bulger would not have faced a trial.
Jon Venables and Robert Thompson were only 10 when they abducted two-year-old James from a Liverpool shopping centre before torturing and killing him.
But a string of speakers insisted decriminalisation was not a "soft option" arguing prevention was better than cure.
Lord McNally said: "What we have got to do is hold our nerve against populist talk.
"If prisons really worked then surely we would be building less of them not more of them."
The motion also called for the Prison Service accommodation to be phased out for prisoners aged 15 to 17 and supporting the work of the Youth Justice Board in developing alternative community sentences.
Lib Dem Home Affairs spokesman Mark Oaten said: "The government's track record on dealing with juvenile re-offending is woeful.
"We believe it is better for offenders under 14 to be dealt with by social services, with the most serious offenders being detained in secure accommodation, rather than being placed in a young offenders' institution, which are too often colleges of crime."
The Lib Dems say the move would bring Britain more in line with its European counterparts and believe that at the age of 10, 11 or 12, some young people don't necessarily know the difference between right and wrong.
They also point out that very young offenders may not understand the longer term consequences of their actions.
Most young offenders are dealt with by the Youth Courts, but the most serious cases are heard in the adult courts.
A Lib Dem spokesman said: "If a 10 or 11-year-old were to murder a child they could be put in secure accommodation run by local authority social services.
"Putting young people in a young offenders institute is going to lead to more crime and self harming."
The plan comes after the number of youngsters being held in detention centres and prisons were highlighted by the death of 14-year-old Adam Rickwood.
Adam became the youngest person in British penal history to die in custody when he was found hanged in his cell in Hassockfield secure training centre, County Durham.
A committee of MPs, the Joint Committee on Human Rights, is to look in to the circumstances around his death.
Other Lib Dem plans to deal with crime include:
Requiring non-violent offenders to "pay back" victims and communities by carrying out work chosen by local people
Bringing offenders and victims face to face "to facilitate direct reparation either in cash or kind"
Expanding the use of reparation orders for juveniles and to pilot their use for adults
To make basic literacy numeracy and communications skills available to all prisoners and compulsory in some cases.