The workshop is white-walled, spacious, light and airy. In one corner, three men put the finishing touches to a doll's house, in another rabbit hutches are being made. The walls are lined with birds' nesting boxes, large wooden toy trains and ornate concrete planters.

It is only when the late morning sun streams through the high windows, casting striped patterns on the walls, that these pleasant surrondings are betrayed. For the stripes are the shadows of the bars on the windows. This is a prison workshop, and the men in it, going cheerfully about their work, are inmates doing time for offences which range from murder to drunk driving.

Admittedly, High Down, a category B prison in Sutton, Surrey, is a model jail. Opened in 1993, it practises new-style incarceration concepts. Yes, there are heavy, 1ft-thick metal doors everywhere. But apart from that, the regime seems extremely relaxed.

Inmates are allowed to move about freely all day, there are several workshops, classrooms, fish-breeding rooms, and open visiting rooms. "This new way of doing things is working," says Bill Robinson, a governor at High Down who has 40 years' experience within the system. The modern workshops, he feels, are a particularly good idea.

Where once a prison workshop was synonymous with a factory-type sweatshop, where inmates were exploited as cheap labour by the Government or large manufacturers and given repetitive, unstimulating mass-production work, today things are changing. New prisons, and many older establishments around the country, now encourage inmates to make useful, creative products - either for charities or to be sold for a small profit on the open market.

"Restorative justice is at the heart of this work," says the Rev Peter Timms, an ex-prison governor who founded the Prison Charity Shops Trust four years ago. This arranges for these prison-made products (which range from children's wooden toys to clothes, kitchenware and garden furniture and come from the 160 prisons nationwide) to be sold through Time, a shop in York, as well as a few other outlets around the country.

"As a prison governor, I realised that prisons have never been able to use rehabilitative work fully and effectively. This way, prisoners are working for the benefit of others, and it's important for them to achieve that," says Mr Timms.

He believes that once a reason and a meaning are attached to prison work, the inmates' attitude to doing it changes dramatically. "Prisoners don't like sewing mail bags for the Government," he says. "But they are very happy to sew mail bags for an old ladies' home. What we do, prisoners want to do."

He believes theological principles are the dynamics which make his scheme work. "It's a way of making amends. Making something which is going to help other people gives the prisoners back some dignity. It's a way of giving something back for the hurt done."

Both Mr Timms and Mr Robinson agree that if prisoners got more involved in charity work and production work of this kind, society would see prisons as less of a dustbin for the dregs of humanity and more as a place where productive work and a worthwhile contribution to society can be made.

Not only this but, for many inmates, the hours of labour put into making even the most crude and simple items gives them the opportunity to pick up a skill they might never have had the chance or the time to learn on the outside.

"Look at this," says Mr Timms, running his finger along the smoothly planed edges of a new rabbit hutch. "You couldn't do this without getting a splinter in your hand if you bought one from a pet shop. The men here have all the time in the world to perfect what they're doing."

Time, the name of the shop, is meant to reflect this irony. Doing time, being deprived of one's freedom, is the ultimate punishment, except when it comes to learning new skills. Only then can you use it to your advantage.

Richard Barlow, 24, agrees. A roofer and labourer by trade, he is doing three months for a driving offence. "I made a wooden heart for my girlfriend, which she loved, and I can see myself making them to sell in shops in my home town when I get out."

Allan Gibson, 42, is serving a nine-year sentence after being caught smuggling cocaine into the country. "I didn't think I was capable of making something like this train," he says of a giant wooden Puffing Billy that children will love. "I've been doing little things in here ever since. I'm going to try screen-printing next. By the time I leave here, I'll have the confidence to try making things like this for myself. I don't like admitting it, but it's doing me a favour."

The favour is mutual, for many things sold at Time are not only of high quality, but covetable or useful. "At Christmas, the children's toys are extremely popular, we can't sell enough of them," says Judy Binns, the manager.

Old-fashioned wooden toys can be expensive, retailing for hundreds of pounds in London stores such as Harrods or Hamleys. But wooden train engines, for example, which cost hundreds at Hamleys, sell for pounds 50 at Time.

Whether it is something for the garden (the Brixton jail birdfeeder is popular), a soft toy, a "prison denim" shirt or simply a kitchen-roll holder, everything sold through the shop is well made and hand-crafted at unbeatable prices.

"We provide a legitimate and legal avenue for prison work," says Mr Timms, "but it's an avenue that benefits the community. Doing something that pays back into society supersedes the deprivations of prison life. Charity work is related to people with greater needs. I look for the day when a large prison will substantially support the local hospice, for instance. That's precisely what prison should be about."

Time, 15 Petergate, York (01904 671 355). Other outlets: Galleries of Justice, Shire Hall, High Pavement, Nottingham (0115 952055); HM Prison Museum, Gloucester Prison (01452 529551); Barge Crafted Products, The Bagette Barge, The Basin, Stratford-upon-Avon. Prison Charity Shops Trust, Chesham House, 29-30 Warwick St, London W1 (0171-437 4334).