Home secretary David Blunkett this week bowed to pressure from campaign groups and Labour Party figures and announced that the much-criticised voucher scheme for asylum seekers will be phased out by next September.

Outlining the government's long-overdue "fundamental overhaul" of asylum policies in a statement to the House of Commons, Blunkett said the voucher scheme and system of dispersing asylum seekers into local authority accommodation would be replaced by a national network of induction, accommodation and removal centres, and the introduction of ID smart cards for all asylum seekers.

The smart cards, to be phased in from January, will replace the standard acknowledgement letters used for identification and are intended to combat fraud by including the owners' photographic and fingerprint details. They will "supersede" the voucher system, establishing a "more robust but less socially divisive scheme", Blunkett said.

But Refugee Council chief executive Nick Hardwick said the vouchers' successors were not without their own complications. "We are concerned that the introduction of these so-called smart cards will exacerbate the problems that asylum seekers already face in accessing basic services to which they are entitled," Hardwick said.

A network of induction centres will be developed to accommodate new applicants for two to 10 days, enabling screening, health checks, and identification procedures. This will remove the need for widespread emergency bed and breakfast accommodation for new arrivals.

Subject to successful pilots, accommodation centres will then replace the system of support and dispersal, offering asylum seekers full board, education, and health facilities, and "thereby removing the need for vouchers". Those in accommodation centres will also receive a small cash allowance.

Anyone refusing an accommodation centre place will disqualify themselves from further support. All asylum seekers, whether receiving support or not, will have to make themselves "regularly available at new reporting centres", Blunkett added.

While the 3,000-place trial is being evaluated, further steps will be taken to improve the current system, including increasing the cash element of the voucher scheme from £10 to £14, and improving consultation with local authorities, private providers and the voluntary sector over dispersal arrangements.

He also promised to "tackle head on" the backlog of asylum applications by improving the throughput of appeals.

Decisions will then lead to either fast-track removal or a greater focus on integration for those granted refugee status. He proposed 4,000 places in new secure removal centres to house those whose applications fail, hailing an end to the use of mainstream prisons for this purpose.

A white paper detailing Blunkett's vision of "radical and fundamental reform" is expected to be published early next year.