The Welsh assembly should be given power over policing and the justice system, a landmark report on the future of devolution has concluded.

Other changes proposed by the Silk commission, which was set up by the UK government, include giving Cardiff greater control over transport issues and larger energy projects, and increasing the number of backbench assembly members.

Set up in October 2011, the Commission on Devolution in Wales published its first report in November 2012, calling for the assembly to have greater powers over tax and borrowing. It has spent a year reviewing the powers of the Welsh assembly and makes 61 recommendations in its report, Empowerment and Responsibility: Legislative Powers to Strengthen Wales. Of the 31 recommendations made, 30 were accepted in part or whole. These are now being taken forward through the draft Wales bill.

It concludes that the current settlement is over-complex and there is broad support for further devolved powers.

The commission also recommends a fundamental change: moving to a "reserved powers model", which sets out powers that are not devolved rather than those that are. Such a system operates in Scotland.

Recommendations for changes include devolving most aspects of policing, and a phased approach to the devolution of the justice system. This means devolving the youth justice system immediately, with a feasibility study for the devolution of prisons and probation to follow. A review of other aspects of the justice system would be completed and implemented by 2025. Powers would also be devolved in relation to ports, rail, bus and taxi regulation, speed and drink drive limits.

The commission's chair, Paul Silk, said: "At a time when constitutional issues are high on the agenda in the United Kingdom, we have agreed recommendations that will provide a stable and well-founded devolution settlement fit for the future. It will give Wales a lasting settlement, that allow political decisions to be made in a democratic and accountable manner."

The UK government said it would carefully consider the recommendations. The prime minister, David Cameron, said: "I am proud of this government's record in delivering for Wales and bringing further devolution. The tax and borrowing powers we are devolving will give the Welsh assembly and Welsh government additional means to help generate economic growth.

"Today's report makes recommendations that propose a new course for the future. I know that the secretary of state for Wales and colleagues from across government will give careful thought to each of the recommendations made."

David Jones, the secretary of state for Wales, added: "The report raises crucially important questions about the future governance of Wales within the United Kingdom. Therefore, it is only right that we now take the time to consider in full each of the recommendations and their implications.

"We will consider implementing some of the changes the commission has recommended during this parliament. But there is insufficient time remaining in this parliament to implement any changes that require primary legislation. These will therefore be a matter for the next government and parliament, and for political parties to set out their proposals and intentions to the electorate ahead of the general election in 2015."

Welcoming the report, the first minister of Wales, Carwyn Jones, said it had "struck a workable balance between Wales and London". Jones said he was pleased that the commission believed policing and decisions over major power projects should be devolved.

"The report endorses our view that matters only affecting Wales should be decided in Wales," he said. "Devolving new energy powers to Wales will ensure decisions on developments which affect Wales are made in Wales. This will allow us to maximise the economic potential of renewable energy power generation, as well as enabling locally sensitive decision making."

Jones said the Welsh government believed the new powers should be devolved to the assembly by 2020-21, as part of a wider reform of the UK constitution after the Scottish independence referendum.

But Plaid Cymru's Westminster leader, Elfyn Llwyd, criticised the pace of progress on Welsh devolution: "Having made great strides on the devolution journey in recent decades, it feels as if Wales is now sadly being dragged along at an agonisingly slow pace of progress."