Nick Clegg moved to inject a Liberal element into the government's response to the riots when he announced a "riot payback" scheme to make looters and arsonists face their victims, along with support to help ex-offenders find jobs.

The deputy prime minister confirmed plans for an independent inquiry into the causes of the outbreaks of violence and looting across England last week after he negotiated a deal between the Tories – who initially rejected the idea – and Ed Miliband, who has repeatedly called for an inquiry.

It will not, however, be a full, judge-led inquiry with powers to summon witnesses, but a communities and victims panel that will report its findings in six to nine months.

The community payback schemes, which see offenders carry out a period of service for their victims, will mean looters will do community service in riot-hit neighbourhoods.

They will wear orange suits to make them visible, and money is being provided to enable victims who want to do so to confront the people who torched their homes or looted their businesses last week.

Clegg, speaking at a press conference in Whitehall, took a markedly different tone to the hardline stance adopted by David Cameron on Monday, stressing the need to break repeat offending in inner city areas rather than seeking to make judgments on the causes of the problems.

The deputy PM said he wanted to end the "dismal cycle of repeat crime" by a hard core of criminals, pointing out that the majority of adults so far charged with riot-related offences already had a criminal record.

The government's work programme to help people out of long-term unemployment will be extended to all ex-offenders, starting in two pilot areas. From March 2012, all ex-offenders in those areas will be met by an employment adviser from a private company which will be paid using a payment by results system when a person has secured a job for a set period.

"We need to ensure that the treadmill, this dismal cycle of repeat crime, is stopped," Clegg said. "We have thousands upon thousands of victims who are needlessly hurt because we have failed as a country to stop the cycle of repeat crime.

"We said we were going to pioneer a rehabilitation revolution to stop this downward spiral of repeat crime.

"From March 2012, every offender who leaves prison won't just be allowed to drift back into their old life, won't just be able to drift into a life of worklessness and repeat crime only to turn up in the same prison having been sentenced again for an even more serious offence.

"If we want to stop for good the outbreak of crime, of looting and criminality, of what we saw last week, we need to get tough on the causes of repeat crime."

In an apparent dig at both his coalition partners and the opposition, he said there was a tendency for parties to adopt "cardboard cutout" positions to social problems, with one side blaming the problems on a breakdown in society and the other blaming government policy.

He said he had sought an independent inquiry into the causes of the disturbances to draw on evidence from the communities themselves. Government sources said he had "brokered" the deal between Labour and the government for the inquiry, which will report to all three party leaders.

"The principle is really clear – we don't want a grandees' committee, we want a grassroots process, where people in the communities affected, and the victims who have been so damaged and hurt, can give their views about what needs to happen to ensure it doesn't happen again," he said.

He added that of the people so far charged with riot-related offences, only 21% were under 18 and only one in 10 were women, despite a perception of the violence being youth-elated and involving a large proportion being women. The inquiry would help explode any such myths about the events, he said.

Clegg distanced himself from the government's wider plans to strip some benefits from rioters, stressing that there were already some conditions attached to welfare payments and warning of the need to ensure there were no "unintended consequences" of further social problems.

But he also acknowledged that the government would be revisiting its position on the extension of gang injunctions to under-18s in the wake of the riots.

Clegg rejected the suggestion that the riots were the fulfilment of his prediction, made prior to the election, that there would be Greek-stye riots over the Tory cuts plans. "It's simply ludicrous to suggest that people smashed a window because they didn't like government policy," he said.

"What I was warning about last year was protest against government. This wasn't protest against government. This was a nihilistic outbreak of acquisitive crime.

"Of course we need to now reflect on the wider issues. I'm absolutely clear that we need to work even harder now to spread opportunity to all of our community because, if you think you have opportunity, if you have a stake in society, if you think you have a fair chance of getting ahead then of course you'll do the right thing. You'll act with greater responsibility."