Critics say payments over 7 July were too little too late

Instead they would receive practical help such as counselling or help with insurance claims.

The Criminal Injuries Compensation Scheme would focus on those with the most serious injuries, and the current �500,000 award limit would be removed.

The existing scheme was criticised by those affected by 7 July bombings.

Practical support

Under the current system, tens of thousands of crime victims each year are given small awards, usually less than �5,000, for injuries such as concussion, fractured ribs, and small burns.

Under the new system, this cash would be stopped, and replaced with practical help through newly-established Victim Care Units.

Many victims need better practical support after they have suffered a crime - like a new lock fitted to their door Fiona Mactaggart, Victims minister

The money would be redirected to those with more serious injury.

Launching the consultation paper Rebuilding Lives - Supporting Victims of Crime, victims minister Fiona Mactaggart said the plans would simplify the current system and improve support.

"Many victims need better practical support after they have suffered a crime - like a new lock fitted to their door, help with dentists' bills or special services for disabled or elderly victims.

"We want to provide that help and put victims' needs first."

But she said victims of more serious crimes required financial support as "an essential element of the overall package".

She said she agreed with those affected by the 7 July bomb attacks, saying that the current compensation system was "insufficient and too slow".

So far, the Criminal Injuries Compensation Authority has made 106 payments totalling more than �1m to victims of the London attacks in which 52 people were killed and hundreds injured.

Victims' groups have criticised this as a "pittance" and too slow to arrive.

This prompted a Home Office re-think of the way the system works.

However, ministers have ruled out bringing in a separate scheme for victims of terrorist attacks.

'Mental scars'

Victims' groups welcomed the new emphasis on practical support but criticised the plan to cut compensation to victims of more minor crimes.

Clive Elliot, chair of Victims Voice - a federation of 14 victims' groups - accused ministers of "penny pinching".

"Any victim of crime not only suffers physical damage, but psychological damage," he told BBC Radio Five Live.

"And even if it's just concussion or broken ribs for instance, that particular victim may for many, many years later live in fear, be stigmatised by the crime.

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"So what the government needs to do is, don't penny pinch and decide who's more, who should get it, but in fact put more money in, and really take it on board, the serious, adverse effects that the crime causes."

Victim Support chief executive Dame Helen Reeves said: "We believe that even a small payment of state compensation is an important gesture of recognition and solidarity for the distress and suffering caused by a violent crime.

"We welcome the wish to speed up and simplify the compensation system, but in an ideal world there would be well-resourced services alongside an effective and equally well-resourced compensation system."

Law firm Irwin Mitchell, which represents some of the 7 July victims, was also disappointed more money had not been made available to all crime victims.

Partner Colin Ettinger said the majority of people who had suffered from crime would receive nothing under the plans.

He said: "When an elderly man or woman is mugged in the street, tackled to the floor and receives severe bruising and damaged ribs they would, under the plans announced today, not be eligible for any compensation.

"On top of the physical injuries there are the mental scars to consider in cases such as these."