Ministers want to shift the emphasis from criminalising teenagers who trade in sex and focus on helping them.
As The Independent revealed yesterday, new evidence suggests the number of child prostitutes in Britain has been greatly underestimated. Two projects in Nottingham and Wolverhampton have discovered about 125 boys and girls aged from 11 to 18 selling sex.
The Home Office and Department of Health are compiling guidelines, expected to be announced in October, which will stress the importance of intervention by the police and social services rather than punishment. "They will look at children as victims, rather than consenting prostitutes," said a Home Office spokeswoman.
There will also be action against pimps, particularly those who force teenagers into selling sex from private accommodation. As part of a general review of sex offences the Home Office is examining ways of redefining the pimping laws to make them simpler and to provide tougher sentences.
At present the maximum penalty is seven years but only 106 people were prosecuted for such offences in 1996.
The schemes in Wolverhampton and Nottingham, in which the police and social services have worked together to help young people break away from selling sex, are seen as a likely blueprint. Of the 50 girls who came to notice in Nottingham, 85 per cent have not returned to prostitution.
Children's charities want the law to allow under-18s involved in prostitution to be treated as children at risk rather than law-breakers. The Home Office says that to decriminalise child prostitution would send the wrong message.