Offenders serving short jail terms should be held in "community prisons" so they can be closer to their families, the home secretary believes.
The speech will be Charles Clarke's first major one on prisons
Charles Clarke is expected to include the idea in a speech to the Prison Reform Trust, setting out his vision for the prison and probation services.
The plan would not involve building new prisons, but using them differently.
The prisons would help inmates maintain family and work ties, and thus cut reoffending rates, Mr Clarke believes.
It is Mr Clarke's first major speech on penal policy since he became home secretary in December.
Like his predecessor, David Blunkett, he will emphasise the importance of imprisonment to protect the public from dangerous offenders.
But he will advocate more use of non-custodial sentences for less serious criminals.
His new concept of community prisons will be for inmates serving short terms, including those with drug or mental health problems.
In an interview with the Guardian, Mr Clarke said: "We need to get to a state of affairs where prisoners are able to reintegrate into society through developing their relations with their friends and family.
"The break in that - and it happens often - is the damaging thing in people's ability to stop reoffending."
BBC home affairs correspondent Danny Shaw said: "With prison numbers at record levels Mr Clarke is aware that it could take some time before the idea becomes reality."
Lack of resources
Bob Turney spent 18 years of his early life in and out of prison before becoming a probation officer, and he is now a consultant to the Probation Service.
He said community prisons were a good idea, but the government would have to build new jails to make it a reality.
"In theory they are very, very good because prisoners don't get moved too far away from the family, they can have family links, we can work with the families and get them ready for release.
May 2005: 76,033
1995 (average): 50,962
Prison capacity 2005: 77,000
Source: Prison Reform Trust
"But until we have the resources to do that, it's just not going to work.
"From my understanding they're not going to build any more facilities or release any more money, so I can't see it happening," he said.
Colin Moses, chairman of the Prison Officers' Association, said ministers should be seeking the views of prison officers and other frontline staff.
He told the BBC the government should be investing in Britain's existing public sector prisons.
"We've got existing prisons where we have land inside of those walls, where we could be building new house blocks, new workshops, education, and also the correct staffing in those prisons," Mr Moses said.