A new criminal offence of domestic abuse could be introduced to include emotional and psychological harm inflicted by a partner within a relationship.

The government launched a consultation on Wednesday to look at strengthening the law by explicitly stating that domestic abuse covers coercive and controlling behaviour as well as physical harm.

The move comes after the way that police respond to domestic abuse in England and Wales was condemned as "alarming and unacceptable" in a report by Her Majesty's Inspectorate of Constabulary (HMIC) in March.

The consultation document says that police fail to see abuse, particularly in its nonviolent form, as a serious crime, adding: "Creating a specific offence of domestic abuse may send a clear, consistent message to frontline agencies that nonviolent control in an intimate relationship is criminal.

"Explicitly capturing this in legislation may also help victims identify the behaviour they are suffering as wrong and encourage them to report it, and cause perpetrators to rethink their controlling behaviour."

The latest statistics reported in the Crime Survey for England and Wales suggest that 30% of women and 16% of men will experience domestic abuse during their lifetime.

The Home Office said the type of behaviour a new law could cover included threatening a partner with violence, cutting them off from friends and family or refusing them access to money in order to limit their freedom. Under existing law, nonviolent coercive and controlling behaviour is captured by the legislation that covers stalking and harassment but it does not explicitly apply to intimate relationships.

The home secretary, Theresa May, said: "Tackling domestic abuse is one of this government's top priorities. The government is clear that abuse is not just physical. Victims who are subjected to a living hell by their partners must have the confidence to come forward. Meanwhile, I want perpetrators to be in no doubt that their cruel and controlling behaviour is criminal."

In the introduction to the consultation document, May acknowledges that changing the law cannot be a substitute for improving the police response – HMIC found that arrest rates varied from 45% to 90% across the 43 police forces in England and Wales – but says officers must have the best possible tools to do their job.

Polly Neate, chief executive of the charity Women's Aid, said the change, if implemented, could help give victims greater confidence to speak out sooner. "This is a vital step forward for victims of domestic violence," she said.

"Two women a week are killed by domestic violence, and in our experience of working with survivors, coercive controlling behaviour is at the heart of the most dangerous abuse. This move demonstrates a strong commitment from the Home Office to listening to victims of abuse in framing the law that serves them."

The shadow home secretary, Yvette Cooper, welcomed the move but said the coalition had presided over a "backwards slide" in action against domestic violence and support for victims. "Under this government, refuges across the country are cutting services and many are threatened with closure," said Cooper.

"Prosecutions and convictions as a proportion of recorded domestic crime are falling. And over the last four years over 10,000 perpetrators of domestic violence have been handed only community resolutions, with many simply being asked to apologise to their victim."