Justice Secretary Kenneth Clarke's plans to limit the use of remand and reform controversial indeterminate sentences put cost-cutting before public protection, Labour has said.
Shadow justice secretary Sadiq Khan said his party could not support the legislation and claimed ministers were "out of touch" with public concern over crime.
The plans leave a £140 million hole in the Ministry of Justice budget, with further uncosted proposals still to come, he said.
Mr Khan also hit out at the Bill's changes to the legal aid system, claiming the "poorest and most in need" were being hit hardest by the Government's cuts.
Limiting the use of remand "undermines a vital tool judges and magistrates should have at their disposal", Mr Khan said.
He added that Labour will also "not accept plans that water down the protection given to the public by indeterminate sentences for public protection".
"This Government is out of touch with public concerns on crime and justice," Mr Khan said.
Warning of "dire consequences for communities across the country", he said: "Their bid to cut costs and prison places seem to come before their duty to protect the public and support victims."
He also pointed to the opposition of Victims and Witnesses Commissioner Louise Casey, circuit judges and magistrates to the plans to rule out remanding defendants in custody who are unlikely to receive a prison sentence if convicted.
The move is expected to save up to 1,400 prison places and £40 million as the Government faces a prison population in England and Wales which stands just short of last October's record high of 85,495.
On the hole in the department's budget, largely the result of the Government's U-turn on halving sentences for offenders who plead guilty early, the Ministry of Justice said it was working with the Treasury to identify savings.
There was "time to carefully consider various options across the whole of the Ministry of Justice budget, before we proceed", a spokesman said.
Prime Minister David Cameron has also announced plans to review the use of indeterminate jail sentences for public protection (IPPs), saying they could be replaced with "a greater number of life sentences".
But the Bill, which will have its second reading in the Commons today, is also expected to face criticism from some right-wing Tory MPs.
Conservative backbencher Philip Davies urged Mr Clarke not to scale back indeterminate sentences as they were the "single best" way of reducing reoffending.
Mr Davies defended IPPs in the Commons yesterday, telling Mr Clarke the reoffending rate for IPPs was just 5%.
But Mr Clarke said the IPP "experiment" left prisoners in a "Catch 22" situation, with no way of showing they were a "minimal risk to society", which they must do before they can be released, from behind bars.
Mr Clarke's plans were also attacked by the Law Society, which said the Bill will increase criminality, damage social cohesion and penalise victims of crime.
Linda Lee, president of the society which represents solicitors, said: "Ministers must start making the link between cuts to civil legal aid and crime."
People who are denied access to justice may take the law into their own hands and civil issues become criminal cases, she said.
"The people who will suffer are the weak and the vulnerable," she said.
"It will be the babies seriously injured in accidents during their birth, for whom there will be no civil legal aid to secure compensation.
"It will be the woman looking after her disabled mother, who can no longer get advice when her carer's benefit is wrongly stopped.
"It will be the man whose ex-wife will no longer let him see his children."
Her warning of a "two-tier justice system" with "one for the very rich who can afford representation before the courts and none for the rest of us" came after the only female justice at the Supreme Court said the Big Society will be "the big loser" if people feel they are being denied access to justice.
Lady Hale warned that the Government's proposed cuts to legal aid would have a "disproportionate effect on the poorest and most vulnerable in society".
Mr Clarke plans to cut legal aid for most private family law cases, clinical negligence, employment, immigration, some debt and housing issues, some education cases and welfare benefits.
The move will put publicly funded legal advice and representation "beyond the reach of vast swathes of the British population", campaigners have said.
But Mr Clarke said the legal aid system in England and Wales is one of the most expensive in the world as it encourages lengthy, acrimonious and sometimes unnecessary court proceedings at taxpayers' expense.
Instead, "alternative, less adversarial means of resolving problems" should be used, he said, adding that "fundamental rights to access to justice will be protected".
A Ministry of Justice spokesman said: "Legal aid has expanded far beyond its original scope, and is available for a wide range of issues, many of which should not require any legal expertise to resolve.
"Our measures are designed to ensure that legal aid is targeted at the most serious cases and those who most need legal support."
Bar Council chairman Peter Lodder said that it was a "much-peddled myth" that Britain's legal aid system was more expensive than elsewhere in Europe and urged the Government to think again.
Mr Lodder told BBC Radio 4's Today programme: "There was an enormous fuss about the proposals to cut sentences and when the Prime Minister was questioned about his U-turn on sentences, he said 'Why have a consultation process and not listen?'.
"There was a consultation process. Thousands of people responded to that process and most of them objected to the way in which the Government was proposing to cut legal aid."
Mr Clarke denied today being ordered by Mr Cameron to commit a U-turn on his proposal for a 50% sentence discount for offenders who plead guilty at an early stage.
The Justice Secretary told BBC Radio 4's Today programme: "The Prime Minister never ordered me to do anything."
Mr Clarke said it was "a pity" that he had not been able to go ahead with the 50% discount plan, which would have relieved many victims and witnesses of the ordeal of having to appear in court, but insisted it did not amount to a U-turn.
"You can't have a system whereby every time you consult, if you alter it people get laughably excited about a U-turn," said Mr Clarke.
"I have made U-turns sometimes when I have made mistakes, but I don't think this is a U-turn.
"It was a huge process of consultation with thousands of responses and, if you know anything about the criminal justice system, it is not easy just to put out proposals without having to modify them in the light of what people say."
Mr Clarke said the extra £100 million savings he is having to find in his budget as a result of dumping the 50% discount plan was "not a very large amount" as a proportion of overall reductions totalling £2 billion.
He denied that he was planning to deal with the unexpected shortfall by slashing the budget for the probation service.
"It isn't just going to come out of probation," he said. "Probation has already been reduced in spending.
"Probation, like everything else, is going to have to contribute to better efficiency and being better targeted, but we need the probation service if we want to stop people reoffending.
"I don't just go around slashing budgets in all directions. I am now trying to identify where we can make the savings. I am going to make my best endeavours to find the £100 million and I am looking through the whole department."
Mr Clarke said the legal aid system in England and Wales was more expensive than anywhere else in the world and costs need to be reined in.
The Justice Secretary told Today: "There are lots of people who think we should have more and more prisons and more and more prisoners and spend more money, and there are lots of lawyers who say we should spend more and more money on lawyers.
"Our legal aid bill is the most expensive in the world by far and we are funding litigation which is perfectly unnecessary in less serious matters where really taxpayers shouldn't pay.
"We are funding litigation where adversarial lawyers are not the best way of sorting out a serious dispute or a serious family quarrel."
Mr Clarke said he was determined to abolish indeterminate sentences, which had been introduced by the previous Labour administration as a "gimmick" and proved to be "an unmitigated disaster".
"I am carrying out a serious review to work out a proper replacement," he said. "These are serious offenders. Some of them will be given life sentences by judges if there isn't an indeterminate sentence available, others will get long determinate sentences.
"We are reviewing it to come up with a workable replacement which doesn't fill the prisons with a lot of people who have no idea when or if they will ever get released."Reuse content