Plans to offer a 50 per cent sentence discount to offenders who plead guilty early will be scrapped today by David Cameron.
The Prime Minister will confirm a retreat from Kenneth Clarke's controversial scheme, which caused uproar when it emerged that rapists and sex offenders could see their jail terms halved.
The Justice Secretary's proposal to increase the maximum discount from 33 per cent to 50 per cent were halted two weeks ago by Mr Cameron. Today's move will be seen as another policy reverse ordered by the Prime Minister, but Downing Street believes it is essential to defuse public anger over the policy.
Ministers are desperate to avoid headlines about more U-turns amid criticism from Tory MPs and Conservative-supporting newspapers that its recent retreat over its NHS reforms has made it look weak.
However, another change of tack is planned to ease the pain of women in their 50s caused by the Government's decision to raise the age at which people qualify for the basic state pension.
Mr Clarke's sentencing proposals had been designed to save £130m by reducing the numbers of prisoners. Most of the cash is now expected to be recouped from a further squeeze on probation budgets.
His plans for a "rehabilitation revolution" had initially been approved by Cabinet colleagues, including the Prime Minister, last December and were enthusiastically endorsed by Liberal Democrat ministers.
But they ran into savage criticism from Tory right-wingers and the Justice Secretary inadvertently fuelled the backlash in an ill-judged defence of the policy in the context of rapists. Labour seized on the "total mess" to accuse the Coalition Government of being weak on law and order.
With the policy in chaos, ministers had considered pressing ahead with 50 per cent discounts for minor offences, but retaining 33 per cent for more serious crimes. But they concluded the compromise would be unworkable and lead to sentencing anomalies. One Whitehall source said: "Various other half-way positions would not have worked."
The source insisted the new package would "strike the right balance" between retaining public confidence in the criminal justice system and offering incentives to offenders to spare victims from reliving their ordeals in court.
After several delays, the revised proposals were finally agreed between Mr Cameron, Mr Clegg and Mr Clarke and will be presented to the Cabinet today.
The sentencing proposals were part of a drive to find savings of £2bn from the Ministry of Justice's £8.7bn budget. Downing Street pointed out that the discount scheme had been part of a wider discussion paper on overhauling the penal system and amounted to a proposal rather than a firm policy. However, as recently as last month Mr Clarke predicted that the proposal was "likely to survive".
As the Government faced criticism over its pension policy, Iain Duncan Smith, the Work and Pensions Secretary, insisted yesterday that it was sticking to the proposal to equalise the state pension age for men and women at 65 in 2018 and to raise the qualifying age to 66 for both sexes two years later. But he said he was "willing to work to get this transition right", adding: "I am quite happy to look at transitional arrangements. I don't rule out discussion."
His officials have started to look at other options in order to prevent women in their late 50s seeing their retirement plans disrupted by the change. But the Treasury is insisting that any alternative proposal should not cost extra money, and one option is to bring forward the state pension age for both men and women. During a Commons debate on the Pensions Bill, MPs from all parties urged Mr Duncan Smith to prevent 300,000 women in their 50s having to work two years longer.
* The Liberal Democrats are preventing Mr Cameron from taking tougher action on immigration and benefit reform than if he led a Tory-only administration, the Prime Minister told BBC Radio 2 yesterday.