It declared that prison was an expensive way of making bad people worse. And it aimed to keep petty property offenders out of jail while ensuring that serious and violent offenders were locked away.
It also attempted to introduce equitable fines - based on ability to pay and replacing a system which saw many people on low incomes going to jail for defaulting.
At the time commentators expressed surprise that such radical criminal justice reform had come from the 'law-and-order' party. With yesterday's retreat - the abolition of unit fines and allowing judges and magistrates greater powers to imprison - cynics were proven right. It became a seven-month failed experiment.
Yet only seven days ago, while Mr Clarke was known to be sympathetic to concern from police, judges and magistrates about the Act, he appeared to be holding on to at least some of its basic principles. He told magistrates he was in favour of unit fines - they merely needed refining.
Their abolition yesterday was being seen as a further indication that the Government was panicking following the 'bloody nose' it received in the Newbury and county council elections.
But defence lawyers suggested his move may now burden the courts with a series of appeals by people who believed they paid excessive fines under the short-lived system.
While police, judges and magistrates are likely to welcome the U-turn, penal reformers and lawyers argued that the problems of prison overcrowding and discrepancies in sentencing which led to the Act will now re-appear.
Yesterday, Tony Edwards, of the Law Society's criminal law committee, said: 'The only thing wrong with the Criminal Justice Act was that it was beginning to work. People were beginning to realise there were other and better ways of dealing with some offenders other than simply locking them up. The prison population was down and there was no indication that it had led to an explosion of crime. It is extremely depressing that in backtracking instead of making minor adjustments, he has undone a lot of good work.'
But Albert Pacey, chairman of the crime committee of the Association of Chief Police Officers, said: 'We certainly welcome this announcement because of the anomalies that have been revealed and it should now allow the courts to deal comprehensively with people who have very bad records and allow them to impose effective sanctions, which has not been the case.'