The government has announced major changes to the system of civil legal aid in England and Wales.

Speaking in the House of Commons, Justice Secretary Kenneth Clarke said civil legal aid would only be routinely available in cases where life or liberty was at stake.

Funding for a wide range of disputes, including some divorce cases and clinical negligence, is to be axed.

The proposals are intended to cut the legal aid bill by £350m a year by 2015.

It is thought there will be 500,000 fewer civil cases as a result.

Announcing the plans, which are open for consultation until February 2011, Mr Clarke told MPs there was a "compelling case for going back to first principles in reforming legal aid".

He said: "It cannot be right that the taxpayer is footing the bill for unnecessary court cases which would never have even reached the courtroom door, were it not for the fact that somebody else was paying.

"I propose to introduce a more targeted civil and family scheme which will discourage people from resorting to lawyers whenever they face a problem, and instead encourage them to consider more suitable methods of dispute resolution."

Analysis Under the government's proposals most divorcing couples will have to mediate, represent themselves in court, or find some other way to fund resolve their differences. They will not get legal aid. And just how easy it will be for a warring couple to enter into a mediation, which requires goodwill and co-operation, remains to be seen. Those involved in a raft of other civil claims, including clinical negligence, will also have to find alternative means of funding. The government needs to see a rise in no win no fee cases here, yet it wants lawyers to forgo large success fees in these cases. That could prevent some lawyers from taking on such cases at all. With legal aid fees for lawyers being cut, some firms may simply stop offering publicly-funded work. That could produce legal aid "deserts", with clients having to travel large distances to find a legal aid lawyer. However, the government hopes its proposals will significantly change the public's attitude to dispute resolution and encourage more people to solve their legal disagreements without recourse to either a lawyer or the courts.

Legal aid will be cut for a wide range of civil cases, including:

Divorce, welfare benefits and school exclusion appeals

Employment

Immigration where the person is not detained

Clinical negligence and personal injury

Legal aid funding will continue for:

Asylum cases

Mental health cases

Debt and housing matters where someone's home is at immediate risk

Family law cases involving domestic violence, forced marriage or child abduction

Funding will still be available for mediation as a means to resolve disputes.

Currently, civil legal aid can provide initial advice on legal problems and family disputes, and legal representation in court proceedings.

Mr Clarke also announced plans to introduce a means-tested contribution in legal aid cases and reform the way lawyers are paid, as well as overhauling conditional fee arrangements in no-win-no-fee cases.

At present, anyone with assets worth less than £8,000 qualifies for legal aid - with those worth up to £3,000 paying nothing and others expected to make a contribution.

Media playback is unsupported on your device Media caption Justice Secretary Kenneth Clarke on why the changes are being made

Under the new system, anyone with assets worth more than £1,000 will have to pay at least £100 towards their legal costs. Fees paid in civil and family cases will also be cut "by 10% across the board", with similar cuts in experts' fees, Mr Clarke said.

And in a move to "contain" the costs of the most expensive criminal cases, he announced plans to introduce a single fixed fee for a guilty plea, based on fee rates in magistrates' courts.

'Crucial role'

Mr Clarke said taken together, the reforms were a move towards a "simpler justice system".

Shadow justice secretary Sadiq Khan told the Commons it was vital that everyone could still access the court system but acknowledged that Labour had also intended to cut its budget had the party won the election.

He said the test was whether the proposals "would deliver a saving to the public purse while ensuring that no-one is denied access to justice because of their means".

"[Legal aid] plays a crucial role in tackling social exclusion, especially in hard times like these, and ensures that everyone is able to obtain access to justice regardless of their means.

"The crucial questions are where to make those savings and how to spend the money that is available," he said.

Legal aid Administered by Legal Services Commission

Annual budget of £2bn

Helps more than two million people a year

Criminal Defence Service covers criminal cases

CDS can advise people detained in police stations

Community Legal Service covers civil cases

Funds solicitors and agencies to advise people on their legal problems, such as eviction, debt and family breakdown, and if necessary represent people in court

But Law Society chief executive Des Hudson warned the government against "playing fast and loose with the basic principle that the courts and justice system are available irrespective of your wealth".

He said he had "severe doubts" about ministers' claims that protection would remain for those who needed it most, and called on them to explain how they would ensure the "weak and downtrodden" were not left without a voice.

It is estimated that barristers doing civil work will see a 42% reduction in their income, the BBC's Danny Shaw says.

Shadow Treasury minister Chris Leslie said organisations such as the Citizens Advice Bureau were in "jeopardy" of closing because they faced a cut in their legal aid funding.

The new rules were "skewed towards hitting the very poorest in society", he added.

Mr Clarke said the government would look at the problem of funding such advice agencies.

He later told the BBC the best way for people of limited means to access justice in areas such as medical negligence would be to use no-win, no-fee lawyers.

BBC home affairs correspondent Daniel Sandford said the plans amounted to a "massive cut" in the legal aid bill, and more than half the cuts would be in the area of family cases such as child access, non-violent domestic disputes, divorce cases, and welfare - and would have an impact on people on low incomes.

Our correspondent predicted there would be "complete outrage" from within the legal profession and agencies which help families - but the government's point of view was that it was time to make big decisions about priorities.