Under the initiative, which begins on Wednesday, youngsters who have completed the custodial part of their sentence will be offered the electronic tagging option.
They will be allowed out during the day to attend work or classes, but will be confined to their homes under curfew in the evenings.
However, probation officers are warning that the scheme will not prevent crimes being committed during the day, so the tagging expansion must be matched by an increase in people working with young offenders.
The scheme is targeted at 12 to 17-year-olds on sentences known as Detention Training Orders (DTOs).
They will be released up to two months early if they agree to be tagged.
If they break the terms of their curfew they could be returned to custody.
Education measures
Announcing the scheme last week, prisons minister Beverley Hughes said: "Fitting electronic tags to juvenile offenders will toughen up the community part of their sentence, ensuring that those young people released under the scheme stick to the conditions of their release.
"We are committed to ensuring community sentences are tough and rigorous and have the full confidence and support of local residents.
"By strengthening DTOs in this way, we have made it possible to increase the number of young people eligible for release."
During this tagging phase, youth offending teams will monitor the teenagers while they fulfil individually tailored packages of reparation, training and education measures.
Those convicted of sexual or serious violent offences will not be eligible for release under the programme.
A scheme was introduced in April to tag teenagers accused of serious crimes - while on bail awaiting trial - to stop them committing further offences.
There were initial problems with the tagging technology, but these have been resolved and it is now regarded as an important tool.
The Home Office is not denying that the renewed enthusiasm for tagging is driven by concerns over the fast-growing population of prisons and Young Offenders Institutions.