Calls for the reform of the prisons system come amid growing concern about overcrowding within the country's jails.
Official figures show that 79,900 inmates were imprisoned across England and Wales last week, with just a few hundred places remaining before prisons reached their full capacity.
According to the IPPR, politicians could "stabilise" the country's prison population and make it ten per cent below current levels if further programmes were made available to treat offenders' drug and mental health problems and women sentenced to less than six months in jail were instead given community sentences.
Stressing that more than half of women prisoners have children aged under 16, the thinktank identifies a total of 2,000 female prisoners which it says should have received community sentences, adding that a further 5,000 prisoners need treatment within mental health accommodation and an additional 5,000 should undergo rehabilitation programmes within drug treatment centres.
The IPPR also claims that prison overcrowding combined with a rapid turnover of prisoners is making it difficult to implement existing measures designed to improve inmates' basic skills and give them access to drug treatment and cognitive behaviour therapy programmes within jail.
In its report, published ahead of a collection of essays to mark the tenth anniversary of Labour's 1997 election victory, the thinktank adds that the government should abandon its focus on tackling "high volume" crimes such as car theft and burglary and instead target those crimes which cause the most "harm" to people, such as domestic violence and "repeat victimisation".
Other recommendations include a call for the introduction of tougher and "more visible" community sentences to restore public faith in them as an alternative to short prison sentences and for a Sure Start Plus programme to target primary school children "at risk of becoming career criminals".
"Prison should be used far less in Britain but to greater effect," said IPPR director Nick Pearce.
Last month, home secretary John Reid announced the publication of a detailed policy document outlining the government's proposals for tackling crime over the next decade, including plans for tougher new community punishments which would allow members of a local area to help determine how offenders should contribute to society
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