More than 50,000 short-sentence prisoners a year are to be given new 12-month compulsory supervision orders under rehabilitation plans run by private companies and charities to be announced by the justice secretary, Chris Grayling.

Ministry of Justice officials say the plans – which could prevent former prisoners from moving to a different area and subject them to compulsory tests for class B drugs such as cannabis – represent the most significant change to short custodial sentences in a decade.

The 12-month period of statutory supervision by companies such as G4S or Serco on payment-by-results contracts will apply to all offenders sent to prison for under two years, including petty criminals jailed just for a few days for offences such as non-payment of a fine.

Grayling's announcement is the first detailed government plan to be outlined in the wake of yesterday's Queen's speech.

David Cameron said the package of bills marked a "ruthless" attempt to refocus the work of the government on "hard-working families" as Downing Street removed what the Tories' new campaign director, Lynton Crosby, referred to as "the barnacles off the boat" from its legislative programme.

Omissions from the Queen's speech, such as a minimum price for alcohol and plain packaging for cigarettes, were designed to streamline the work of the government, Cameron said. Of the 15 bills unveiled by the Queen, nine are focused on promoting economic growth.

Cameron admitted this is taking longer than expected as he told MPs: "There is only so much we can do in three years to clear up the mess of the past 13 years. The Queen's Speech sets out the next vital steps forward. This government have a solid record of being on the side of those who work hard and want to get on."

Ed Miliband mocked the prime minister for dismissing Ukip as "clowns" but now "joining the circus" by swerving to the right.

The Labour leader said Cameron had tried to imitate Ukip by pledging in his EU speech in January to hold a referendum by 2017 and by now making no mention of the gay marriage bill in the Queen's speech. This has been carried over from the previous session.

The Liberal Democrats were disappointed that a bill to enshrine Britain's commitment to spend 0.7% of gross national income on overseas aid by the end of this year was not included. But they insisted that the Queen's speech bore the "imprints of the Lib Dems all over it".

Party sources said the single-tier pension would not have been introduced without the work of Lib Dem ministers Steve Webb and Norman Lamb. A bill will cap the costs of social care at £72,000.

The Lib Dems were supportive of the immigration bill, which will impose fines on private landlords who fail to check the status of illegal immigrants and place restrictions on migrants' use of the NHS. The bill will not be introduced by the time labour market restrictions are lifted on Romanians and Bulgarians next January.

Government sources said the main measures aimed at citizens from the newest EU member states will be introduced through secondary legislation by next January. These include withdrawing most jobseeker benefits from citizens from European Economic Area countries who fail to find work after six months.

Grayling's offender rehabilitation bill, to be published today[thurs], will introduce powers to require released offenders to undergo compulsory drug tests for cannabis for the first time while they are living in the community under supervision. Those who test positive will face penalties and be required to attend appointments with the drug treatment services.

While they are in the community offenders, who will probably have to wear a new generation of GPS satellite tracking tags, will have to comply with a programme of support on housing, employment, training and alcohol and drug treatment. There will be a new emphasis on using reformed offenders to act as mentors to those newly released from prison. Those who fail to comply or misbehave will face being recalled to jail.

Short-sentence prisoners serving 12 months or less currently have the highest reconviction rate, with 58% found guilty of a fresh offence within a year. Under the MoJ plans the extended period of compulsory supervision and rehabilitation will also apply to a further 15,000 prisoners a year who serve sentences between 12 months and two years and are already subject to shorter periods of being released on licence.

The current 130 prisons in England and Wales are to be reorganised, with more than half – 70 – moving into a national network of resettlement prisons. Offenders will be released into the local area where their rehab and supervision programme is to take place and will be banned from moving to other parts of the country without permission.

Grayling has turbocharged this next phase of the government's "rehabilitation revolution" by demanding it is in place by the 2015 general election.

The justice secretary is also to confirm his plan for the privatisation of 70% of the probation workload of supervising 240,000 offenders a year. Partnerships between private companies and voluntary sector organisations will be invited to bid to take over the supervision of all low- and medium-risk offenders in 21 contract areas.

The role of the 100-year-old public probation service is to be restricted to the 30% of work that involves high-risk offenders and public protection issues.

Grayling said: "Tackling our stubbornly high reoffending rates has dogged successive governments for decades. These reforms represent a golden opportunity to turn the tide and put a stopper in the revolving door of the justice system.

"It is simply not good enough that we spend £4bn a year on prisons and probation, and yet make no real dent in the appetite of offenders to commit more crime. It is little wonder when many of our most prolific criminals leave prison totally unsupervised in the community."

A G4S spokesman said the company was well placed to deliver the kind of innovations that the government was looking at. He claimed its long history of working with offenders in partnership with the public and voluntary sectors meant G4S had developed substantial expertise in the area.

Max Chambers of the centre-right think-tank, Policy Exchange, said there would be inevitable protests from "vested interests who resist change, including many who oppose this introduction of a profit motive for providers. But it's hard to argue with the idea of rewarding firms who have success in helping chaotic, difficult people to find work, keep a home, get clean and stay on the straight and narrow."

Prison reform groups voiced concerns. Juliet Lyon of the Prison Reform Trust said rehabilitation on release made sense but there was a danger that an inflexible approach to those who breach the conditions of their release could refill the prisons.

Andrew Neilson of the Howard League for Penal Reform also predicted that many would end up behind bars saying the extra support would do little more than repair the damage that prison had caused by leaving them without a job, home or access to their family.