David Cameron's "big society in action" answer to police budget cuts has been revealed as a plan to appeal to the public to take part in "do-it-yourself" policing ‑ and perhaps even go on patrol with uniformed officers.

A radical police reform white paper published by the home secretary, Theresa May, says that she wants to explore new ideas including creating a reserve army of volunteers prepared to act as community crime fighters along similar lines to fire reservists who help staff some neighbourhood fire stations.

The idea for greater public involvement in policing emerged as the home secretary's Liberal Democrat coalition partners warned that the current state of her proposals to introduce directly-elected police and crime commissioners are in danger of giving a green light to "Judge Dredd populists".

The proposal for directly-elected police commissioners, who will have the power to hire and fire chief constables, is already under attack from senior police officers and Conservative-led local government.

The unexpected outspoken criticism from the Liberal Democrats reflects the coalition's failure to agree the detail on the checks and balances that are to be put in place to avoid "populist politicians turning individual forces into their personal fiefdom".

The Home Office consultation paper, published on Monday, says each of the 43 police forces in England and Wales will elect the new commissioners – who will replace existing police authorities – every four years, starting in May 2012, for a maximum of two terms.

The commissioners will be powerful new figures who can not only sack a chief constable if necessary but also set budgets and force priorities.

The Home Office paper says that a new police and crime panel will monitor the commissioner in each force.

The panels will be free to make any concerns public and in cases of serious misconduct to call in the Independent Police Complaints Commission to investigate their commissioner. But how these panels are to be appointed and who will serve on them remains a stumbling block.

The Lib Dem home affairs spokesman, Tom Brake, said that without "tough checks and balances" the proposals could be seen as "a green light for the election of Judge Dredd characters more interested in populism than effective co-operative policing".

In the Commons he warned that there was a danger of populist politicians turning forces into their personal fiefdom.

The Association of Chief Police Officers greeted the proposals very cautiously saying they had to be examined in detail to see how they could "maintain operational independence against the practical reality of directly-elected police and crime commissioners." The Tory-led Local Government Association estimated the elections would cost £50m – the cost of 700 police officers.

The home secretary defended her proposals insisting that by replacing "invisible police authorities" with elected commissioners would forge a direct link between the police and the public and replace bureaucracy with democratic accountability.

But she seemed less attached to the idea floated in the police reform paper to recruit a "do-it-yourself" reserve army of policing volunteers, saying it was a matter for consultation. The scheme was first raised in a Conservative pre-election policy document which talked of creating a "new cadre of police reserves".

The consultation paper says that neighbourhood policing is key to David Cameron's "big society ... we want more active citizens taking part in joint patrols with the police, looking out for their neighbours and passing on safety tips as part of neighbourhood watch groups or as community crime fighters," it says. May said she wanted to see more special constables, whose numbers have plummeted from 67,000 in the 1950s to 15,000 today.

But the paper adds that they want to go further and explore new ideas to "unlock the potential of police volunteers in the workforce, for example, as police "reservists".

It says they would be a "clear manifestation of the 'big society' in action". The public are also to be asked to get involved through "virtual beat meetings" with the police using Facebook and Twitter.

The Home Office paper confirms a shakeup of national policing bodies with a new National Crime Agency to replace the existing Serious and Organised Crime Agency.

The NCA will also have a border policing unit and take in other functions such as managing the national DNA database currently carried out by the National Police Improvement Agency, which is to be phased out.

The Association of Chief Police Officers, which is currently a limited company, is to lose key functions including its role in monitoring domestic extremism and will be established on a more accountable basis involving the new commissioners.