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Children's charities have rejected Labour plans to involve the voluntary sector in the running of young offender institutions.

It was revealed this week that the party is keen for the voluntary sector to bid jointly with private companies to run YOIs, detention centres and prisons as part of its public sector reform programme, in a bid to bring a more humane approach and reduce costs.

But the Children's Society, NCH and Barnardo's have ruled out any involvement in the operation of the prison system in its current form, arguing it would go against their commitment to children's welfare.

Children's Society policy director Kathy Evans said children's charities had been approached by the government about the issue in 1999 and had rejected it then too.

She said that although the charity would "never say never", it could not be involved in the work while there were "systematic" problems with the way custody was used.

"Unless children's welfare is the primary focus of decision-making and of the care they receive it is dubious as to whether we could, just by our philosophy, bring the humane approach they are seeking out," Evans said. "The humane approach should be built in all the way through."

NCH policy director Caroline Abrahams said it would be difficult to square promoting children's welfare with denying them liberty. "Some things are best done by the state and that is one of them," she said.

But the Association of Chief Executives of Voluntary Organisations said it wanted a much more radical debate about the potential role of the voluntary sector in running public services.

Head of policy Nick Aldridge said it was possible for voluntary organisations that felt running prisons did not fall within their charitable purpose to set up a free-standing joint venture in partnership with other agencies to carry out the work.

Individual prisons could also be given more independence in the future, giving voluntary organisations more opportunities to change their culture, he added.

Meanwhile, research company Kable predicted this week that the amount of public sector work outsourced to the private and voluntary sectors would increase by 50 per cent between 2004 and 2007 and be worth £67bn by 2007.