Only the most dangerous female criminals should be kept behind bars, a controversial Government report has said.

Thousands of women currently sentenced to two years or less would escape jail.

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And those who are such a threat to the public that they must be sentenced to custody would no longer go to one of the country's 15 women's prisons – which would all close.

Instead, killers such as Rose West – serving life for the murder of ten young women and girls – would be sent to "homely" local custody units.

There they would be allowed to live as a "family unit" with between 20 and 30 other women prisoners, organising their own shopping, budgets and cooking.

The units would also allow them to stay close to their families.

The radical proposals are made by Labour peer Baroness Corston, in a report commissioned by the Home Office.

She said there are far too many vulnerable women in jail, many serving short sentences.

Instead of being imprisoned, the vast majority of the 4,300 behind bars would be ordered to attend new community centres during the day.

They would be given help to kick any addictions they have, and to stop committing crimes such as shoplifting, before returning home at night.

All the women's jails would shut within the next decade, and could instead be converted into prisons for men.

John Reid is facing chronic overcrowding in men' prison's, forcing him to take the drastic step of begging the courts to jail only the worst offenders.

Closing the women's jails would help the Home Secretary to hit his target of finding 10,000 extra prisons places over the next five years, which is expected to cost £1.5billion.

But allowing thousands of women criminals to walk free would also be politically awkward for Mr Reid, who is desperate not to appear "soft" on crime.

Lady Corston, formerly chairman of the Parliamentary Labour Party, sought to justify the shake-up by claiming custody is "disproportionately harsher" on women.

Many female criminals are victims of abuse such as domestic violence, she said. Sending them to jail means they lose their home and children.

The report claims: "Women and men are different. Equal treatment of men and women does not result in equal outcomes."

Lady Corston said that as a starting point only women given two years or more should be kept behind bars – with community punishments "the norm" for non-violent offenders.

Women also never be sent to jail to "teach them a lesson".

Lady Corston said small custody units were already operating in the US and Canada.

Other proposals include an end to the routine strip-searching of women in prison, and better jail sanitation.

The report, commissioned following the deaths of six women at Styal Prison, Cheshire, called for action on its findings within the next six months.

It was seized on by penal campaigners, who have long insisted too many women are jailed.

But Home Office officials privately questioned whether the political will exists to adopt some of its most controversial ideas, or whether cash is available to build the new community centres and custody units.

Home Office Minister Baroness Scotland said: "I very much welcome this report and have given an undertaking that the Government will look carefully at the issues it raises and the recommendations it makes.

"Vulnerable women who are not a danger to society should not be going to prison."