Private firms and voluntary groups will be invited to run probation services under government plans to cut reoffending rates in England and Wales.
In a statement to the Commons on 9 January 2013 Justice Secretary Chris Grayling said the contracts will be based on payment by results.
"High-risk" cases will continue to be supervised by public sector organisations.
At present, most released prisoners and people serving community sentences are managed by the public sector probation service - provided by 35 trusts across England and Wales.
But Mr Grayling told MPs a "dramatically different" approach was needed because reoffending rates remained "consistently and unacceptably high".
Nearly half of all prisoners were reconvicted within a year of release in 2010, he said, highlighting the economic cost of reoffending, which the National Audit Office estimated to be £13bn in 2007-08.
The government proposals will include a "new emphasis on life management and mentoring support" to address problems that lead to reoffending.
Those serving less than 12 months in prison will be subject to mandatory supervision and tailored rehabilitation on release, he explained.
Shadow justice secretary Sadiq Khan said there was "universal agreement" on the need to do more to reduce reoffending.
But he warned that opening up the probation service to the private sector could threaten public safety.
Justice Secretary Chris Grayling insisted there would be safeguards in place to manage risks.
He said that if an offender posed a greater threat whilst on probation, they could be brought back under the direct control of the public security arrangements.
Sir Alan Beith, Liberal Democrat MP for Berwick-Upon-Tweed, asked the justice secretary to ensure that charities and voluntary groups are not "crowded out" by the way the contracts are let.
The chair of the Justice Select Committee also suggested expanding the role of the Chief Inspector of Probation to "oversee quality control" of the new system.