Charity-funded organisation Rethinking Crime and Punishment said the £2.3 billion due to be spent on "Titan" prisons should be invested in projects which would be more effective in cutting offending.

It proposed spending £300 million on more hostels, half-way houses and other "supervised accommodation" for offenders.

Such institutions are often unpopular with residents who do not want offenders living in their neighbourhood.

The report proposed a programme of different measures over six years which includes using £360 million to enable courts to review progress with 20,000 offenders.

It also proposed sending 6,000 offenders a year who are currently handed short jail terms on intensive offender programmes in the community, at a cost of £180 million.

The charity also suggested placing 1,000 extra young criminals a year on intensive supervision courses, at a cost of £54 million, and creating 500 extra intensive fostering places, at £300 million.

Rethinking Crime and Punishment's director Rob Allen said: "Prison plays a vital role with violent and dangerous offenders, but it is a blunt tool for dealing with many women, children and mentally ill offenders.

"With more than £2 billion set aside for building supersize prisons, this is a once in a lifetime opportunity for the Government to invest instead in interventions that actually work."

Justice minister David Hanson said: "Prison is necessary to punish and reform offenders. It is vital to protect the public from the most serious, dangerous and persistent offenders. Our capacity building programme, which includes plans for Titan prisons, will ensure we have sufficient capacity to do this."