Some prisoners could be given financial help to keep their homes while they are in jail in a proposal designed to cut re-offending rates.

Other inmates serving short sentences could also be paid �100 on their release.

The proposals were set out in a document from the government's Social Exclusion Unit seen by BBC Radio 4's Today programme.

The document outlines plans for "a national strategy for rehabilitation".

It says current policies do not do enough to prevent re-offending, both during and after custody.

It is estimated there are about 100,000 persistent offenders who are responsible for up to half of all recorded crime in England and Wales.

The Social Exclusion Unit wants the pay and privileges system to push prisoners into rehabilitation programmes.

Home truth

Released prisoners without homes to go to are six times more likely to reoffend, according to one study.

Housing benefits should be paid for up to six months to keep homes available, the report said.

It also called for prisoners' discharge grants to be raised from �40 to �100.

Homeless prisoners are six times more likely to reoffend

The Home Office said it would only comment when a report was formally published.

The proposal coincides with the launch of a scheme to offer young offenders early release under a tagging scheme to take the pressure off overcrowded institutions.

Under the initiative, youngsters who have completed the custodial part of their sentence will be offered the electronic tagging option.

They will be allowed out during the day to attend work or classes, but will be confined to their homes under curfew in the evenings.