Following a spate of controversies over the prison terms handed to serious offenders, the Home Secretary announced the second major overhaul of sentencing in three years but gave a vote of confidence to the Human Rights Act.
Mr Reid said the Government needed to "rebalance" justice to take greater account of victims' needs and less of the interests of criminals.
Admitting that current sentencing rules were "utterly bewildering to most people in this country", he proposed ending the discount on time behind bars given to offenders who plead guilty even if they are caught red-handed.
Serious criminals' automatic right to be considered for parole midway through their sentences will be scrapped and in future no prisoner will be released unless all members of their Parole Board agree.
The issues were highlighted by the row over Craig Sweeney, the paedophile who was told last month he could be eligible for parole after he was just five years into his sentence.
The combined effect of Mr Reid's initiatives will be to produce a further sharp rise in the jail population, which at 78,443, a record, is proportionately the highest total in western Europe.
To cope with the increased numbers, Mr Reid said another 8,000 prison places were planned, which would bring the capacity of jails in England and Wales to 88,400 by 2012. The Home Secretary told MPs: "Too often it appears the criminal justice system is on the side of the offender - protecting their interests and individual rights over those of the victim and the law-abiding majority. That has to change."
In other measures, violent offenders will pay towards their victims' healthcare costs, a four-year maximum jail sentence for carrying a knife will be introduced and violent offenders will face tougher supervision after their release. But the introduction of "custody plus", a new sentence that enables minor offenders to spend more time on probation, has been shelved. It was due to start in November.
The Home Secretary insisted the Government favoured "smarter", rather than tougher, sentencing. He dismissed accusations that he was playing to popular prejudice. He said: "One man's populism is another man's intention to listen to the public."
Mr Reid said the Government had decided not to repeal, or amend, the Human Rights Act. But courts and parole boards will be given guidance aimed at dispelling "myths" about its contents. In a new initiative to tackle "low-level offending and antisocial behaviour", a scheme forcing parents to pay for damage caused by their children will be introduced.
The Government is also considering widening the range of antisocial behaviour orders and giving police more summary powers against unruly behaviour.
David Davis, the shadow Home Secretary, said: "This Government has had nine years in office, nine years long on promises and short on delivery. We have heard it all before."
Nick Clegg, the Liberal Democrat home affairs spokesman, said: "Many of these proposals are too little, and most of it is too late. At least the Government is moving to undo some of the damage it has inflicted on our criminal justice system in the last decade."
Juliet Lyon, director of the Prison Reform Trust, said: "The Home Secretary may have announced 8,000 more prison places, but this hotchpotch of eye-catching initiatives will fill them before they are even built."
The reforms
Sentencing
* 8,000 new prison places.
* Serious criminals lose their right to be considered for parole during life sentences.
* Offenders who plead guilty no longer have sentences automatically cut by a third.
* Parole boards must reach unanimous decision to release offender.
* Maximum sentence for knife possession to rise to four years.
Immigration
* Immigration and Nationality Directorate to become "arms length" agency.
* IND to receive extra staff and resources.
* Backlog of asylum cases to be cleared by 2011.
* Embarkation controls expected to be brought back.
Organisation
* New "top team", 15 Home Office directors replaced.
* 300 senior staff to have skills assessed.
* Size of headquarters cut by 2,000 to 5,900 in four years.
Three months of turmoil
* 25 April: Charles Clarke admits 1,000 foreign convicts were freed without deportation hearings
* 28 April: He reveals five of them have committed more crimes since
* 3 May: He admits only 32 of the 70 most serious offenders are traced
* 5 May: Clarke sacked and replaced by John Reid
* 8 May: Reid says actually 150 serious offenders were freed
* 19 May: Five Nigerian illegal immigrants caught working as cleaners in immigration office
* 20 May: Revealed: more than 20 murderers have absconded from open prison over five years
* 23 May: Reid admits parts of Home Office "not fit for purpose"
* 23 May: He apologises for giving wrong statistics to MPs
* 10 July: Home Office admits ID card delays
* 11 July: Mergers of police forces scrapped
* 19 July: Overhaul of Home Office announced
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