Justice minister Maria Eagle has promised to reduce the number of prison places for women by 400 within two years as part of a drive to develop alternatives to jail.

A total of £15.6m is being spent on expanding community sentences in order to provide a "tough and credible" alternative to short prison sentences for female offenders.

Eagle said today that a majority of women offenders had mental health or drug and alcohol problems, backgrounds of abuse or welfare concerns about their children that meant they were better dealt with outside prison.

The number of women in prison has already fallen from 4,398 a year ago to 4,277 last Friday. But this is against a background in which the women's jail population in England and Wales has risen by 60% since 1995.

"We have already made good progress in taking forward our strategy to divert women from crime. Over the last two years I have ensured there is a specific push to direct resources to stop vulnerable women from becoming trapped in a cycle of crime," said Eagle.

"Women's offending is a complex phenomenon which burdens society, damages children and families and creates misery for the women themselves."

The pledge to cut the number of prison places for women involves a reduction of 300 places by March 2011 and of 400 places by March 2012. As well as expanding the number of community punishment projects, the Ministry of Justice is to provide a further £5m to be spent on expanding probation hostels for female offenders who are under supervision after release from prison and to keep out of prison those with high levels of needs.

The strategy will also see a new project starting next April under which family early intervention projects will specifically target a group of women with dependent children who are at risk of becoming involved in crime.

A Ministry of Justice report published today assessed the progress made since Baroness Corston's 2007 report on the position of women in prison.

It said an impact was starting to be made on what were complex and deeply entrenched problems.

"We are implementing a strategy that is focused on making a difference for women within the criminal justice system.

"But we aspire to go further and make more widespread changes which will stop women getting into the system in the first place," says the official assessment.