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Measures aimed at tackling high rates of re-offending by former prisoners have been published by the social exclusion unit this week.

The SEU's report highlights concern over the latest figures that show 58 per cent of released prisoners were convicted of another crime within two years. Seventy-two per cent of 18 to 20-year-old male prisoners were reconvicted over the same period.

Under the new proposals, offenders would be asked to sign a contract at the beginning of their sentence setting out what was expected of them in prison and the community. The going straight contract would initially be piloted on young offenders aged 18 to 20, and extended to other groups if successful.

The contract would include a full-time package of rehabilitation programmes and support, tailored to the individual and based on an assessment of the factors that lead to re-offending.

The programme, which should include rewards for participation and sanctions for non-participation, should be drawn up and overseen by a case manager.

Deputy prime minister John Prescott said: "Prisoners are being presented with a contract. We offer them the support they need to get over the problems that contribute to crime in the first place. In return they have to take responsibility for their actions and work on their problems," he added.

The SEU report shows that most prisoners experience social exclusion before entering prison. They are 13 times more likely than the general population to have been in care as a child, and 60 to 70 per cent were using drugs before imprisonment. More than 70 per cent suffer from at least two mental disorders and more than half of all male prisoners have no qualifications.

Prisons should develop procedures to secure better housing, health, education, employment and family contact, the report says. Prison resettlement departments should have the ability to secure emergency accommodation for prisoners, and the discharge grant, used to cover the period before the first benefit payment, should be increased.

The government's response to the report will be published in the summer. Paul Cavadino, chief executive of rehabilitation agency Nacro, said he hoped the report would be implemented in full: "At present, arrangements to resettle ex-prisoners are patchy, underfunded, and for many short-term prisoners non-existent."

Reducing Re-offending by Ex-Prisoners available from http://www.cabinet-office.gov.uk/seu/published.htm