Justice Secretary Ken Clarke has outlined plans aiming to reduce reoffending, improve sentencing and reform the legal aid system.
In a Commons statement on 21 June 2011, he announced that a new offence of aggravated knife possession would be created, with a mandatory prison sentence of at least six months.
An urgent review of Imprisonment for Public Protection (IPP) would be held, he added.
The IPP system should be replaced with a much tougher regime which would see more serious offenders receiving life sentences, and offenders who commit serious sexual and violent offences spending two thirds of their sentence in prison rather than the half they spend under the current system, he said.
New prison wings designed to get offenders off drink and drugs will also be tested in five jails over the next year as part of a wider drive to tackle addiction inside prison.
Prisoners will also work harder to ensure that they earn money for victims and not just for themselves, the justice secretary added.
But Mr Clarke admitted that he abandoned plans to increase the reduction in sentences for offenders who plead guilty early from one third to one half because he "could not make that work".
Shadow justice secretary Sadiq Khan said the coalition's approach to justice was simply about "cutting costs despite the impact they could have on communities up and down the country".
He told MPs: "The government has seen sense and taken heed of opposition to cost-driven proposals to reduce sentences by 50% on early guilty pleas."
Mr Clarke replied: "Early guilty pleas were a genuine attempt to help victims and witnesses who are mightily relieved if they hear that the person accused has decided to plead guilty.
"If it had worked, it would have saved a very great deal of money and time for the police service, for the Crown Prosecution Service, as well as for the prisons."