Civil rights groups accused the Government of "bottling" the decision on the future of counter-terrorism powers, saying the rebranded control orders were simply a "lower-fat form" of their predecessors and would still restrict rights to privacy, movement and expression.
Home Secretary Theresa May gave a clear signal that the restrictions on suspected terrorists against whom prosecutions cannot be brought are here to stay, saying the powers will no longer need to be reviewed every year.
But the term "control order" has been scrapped and will be replaced with "terrorism prevention and investigation measures", or Tpims.
Shami Chakrabarti, director of Liberty, said: "When it comes to ending punishment without trial, the Government appears to have bottled it.
"Spin and semantics aside, control orders are retained and rebranded, if in a slightly lower-fat form.
"Parliament must now decide whether the final flavour will be of progress, disappointment or downright betrayal."
The plans amount to a "control order-lite" which could lead to "potentially punishing the innocent while the truly dangerous may remain at large in the community", Liberty said.
Tim Hancock, campaigns director of Amnesty International UK, added that while the proposals are "less drastic than the previous control orders regime", Tpims would still impose "significant restrictions on the rights to liberty, privacy, expression, movement and association".
Shadow home secretary Yvette Cooper also warned that the plans are a "political fudge", saying the review of counter-terrorism powers left gaps which raise "serious questions about security and resources".
The new powers will be limited to two years and will only be renewed if there is new evidence that suspects have "re-engaged in terrorism-related activities".
But the decision to scrap 16-hour curfews while bringing in overnight residence requirements, typically of between eight and 10 hours, were greeted with guffaws of laughter from MPs in the Commons.
The overnight stays will be monitored by electronic tags and there will be an additional level of flexibility, with the suspects allowed to apply to spend a night away from their main residence.
Deputy Prime Minister Nick Clegg, who campaigned at the General Election on a pledge to abolish control orders completely, said the new overnight residence rules were "exactly" like the expenses requirements placed on MPs and peers.
He said there had been "fundamental" changes to the old regime, which resulted in a "proportionate response which ensures that we keep the British people safe but do so in line with the finest traditions of due process and equality before the law".
Suspects should be able to "lead a relatively normal life", he said, but "in a way which doesn't allow them to cause damage to the British people".
"We ask MPs and peers in the House of Lords to show that they actually stay overnight in a place in which they say they are living," Mr Clegg told the BBC News Channel. "Using tags, which by the way is used by thousands of people under bail conditions in the criminal justice system already, we want to make sure that if someone says they live in location X, they do indeed spend some time overnight in that location."
Mr Clegg denied failing to secure meaningful change to the previous regime.
"We can play this game deciding whether it's similar to the old regime or not. The reason I don't think it is is because it's changed in fundamental design," he said.
Asked if she accepted that the new plans would still impose on civil liberties, Mrs May said: "What I accept is that sadly there are a small number of cases where we are not able to prosecute people but we do need to take measures to maintain national security and keep people safe."
Eight terror suspects are currently subject to control orders but putting them under surveillance instead would be difficult with limited resources.
The Tpims will give greater freedom of communication and association than the control order regime, which was described by critics as being akin to house arrest.
The new powers will "more clearly target and focus" on limitations, while still enabling authorities to ban a suspect from visiting a particular building or street, Mrs May said.
Limited use of the internet on a home computer will also be permitted, provided that all passwords are provided to the authorities.
But curfews and further restrictions on communications, association and movement could all be brought in as part of "exceptional emergency measures".
Lord Macdonald QC, in his review of counter-terrorism powers, said he would regard the use of curfews and tags as part of a replacement regime for control orders as "disproportionate, unnecessary and objectionable", adding they would "serve no useful purpose".
The current control order regime will remain in place until the end of the year while Parliament considers the legislation, the Home Office said.
An unspecified amount of "new money" will be made available to the security services for counter-terrorism activities over the four-year period of the Government's spending review.
Plans to end the indiscriminate use of terrorism stop-and-search powers, to end the use of surveillance powers by local councils to investigate low-level offences, and a stronger effort to deport foreign nationals involved in terrorist activity were also unveiled.
The end of 28-day detention without charge, which was allowed to lapse back to 14 days as of yesterday, was "one of the key issues that people are concerned about", Mrs May said.
She also told MPs the Government was trying to find "a practical way" of using intercept evidence in courts to tackle terrorism and other serious crime and a report on a "legally viable model" is expected by the summer.
Eric Metcalfe, director of human rights policy at the Justice campaign group, added: "It seems even less likely that any serious terrorist would be stopped by the watered-down version announced today.
"The Coalition Government promised to reverse 'the substantial erosion of civil liberties' under Labour but this review shows that that promise has also been eroded."
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