Michael Gove is set to float the idea of introducing a link between a prisoner's commitment to education and their release date in a bid to overturn high re-offending rates.
Prisons are failing to effectively rehabilitate criminals, the Justice Secretary is expected to say on Friday, as he calls for a new approach to better prepare offenders for their return to society.
In his highly-anticipated first major speech on prisons since the election, Gove will say the failure to teach prisoners a "proper lesson" is "indefensible", adding: "I fear the reason for that is, as things stand, we do not have the right incentives for prisoners to learn or for prison staff to prioritise education. And that's got to change.
"I am attracted to the idea of earned release for those offenders who make a commitment to serious educational activity, who show by their changed attitude that they wish to contribute to society and who work hard to acquire proper qualifications which are externally validated and respected by employers."
He will also suggest more could be done to attach "privileges" to attendance and achievement in education while behind bars.
Ministry of Justice officials are reported to be looking at how the approach could work in practice.
The Lord Chancellor is due to make his comments on Friday
"Although prisons fulfil their function in isolating dangerous offenders from the rest of society and punishing those who break the law, they are "not working in other, crucial ways", Gove is expected to argue.
"Prisons are not playing their part in rehabilitating offenders as they should," Gove will tell assembled reporters.
He is expected to point to figures showing more than two-thirds of young offenders and 45% of adult prisoners re-offend within a year of being released.
"The human cost of this propensity to re-offend is, of course, borne by those who are the most frequent victims of crime - the poorest in our society," Gove will say during the speech at an event in London hosted by the Prisoner Learning Alliance.
His initiative has already been picked up by Labour's Jenny Chapman, MP for Darlington, who told her almost 9,000 followers she "liked the tone" of his speech, trailed to newspapers in late-night briefings on Thursday.
Her colleague Paul Flynn, representing Newport in Wales, remained more sceptical, though, pointing out that Gove was the third consecutive Tory Justice Secretary to attempt to reduce re-offending rates.
But in a staunch shake-up of release rules, Gove has set his sights high on radical form.
"No government serious about building one nation, no minister concerned with greater social justice, can be anything other than horrified by our persistent failure to reduce re-offending," he will say in his speech later.
"Britain must be more demanding of prisons and offenders, giving inmates new opportunities by expecting them to "engage seriously and purposefully in education and work.
"Our streets will not be safer, our children will not be properly protected and our future will not be more secure unless we change the way we treat offenders and offenders then change their lives for the better."
An inability to read or master basic maths made prisoners "prime candidates" for re-offending, he will say, adding: "Ensuring those offenders become literate and numerate makes them employable and thus contributors to society, not a problem for our communities.
The Justice Secretary is attempting to overturn high re-offending rates
"Getting poorly-educated adults to a basic level of literacy and numeracy is straightforward, if tried and tested teaching models are followed.
"So the failure to teach our prisoners a proper lesson is indefensible."
A lack of operational autonomy and genuine independence for prison governors will be singled out by Gove as "one of the biggest brakes on progress", as he suggests they should be given more control.
"A more rigorous monitoring of offenders' level of educational achievements on entry, and on release, would mean governors could be held more accountable for outcomes and the best could be rewarded for their success," he will say.
Gove, who earlier this week eased restrictions on prisoners' access to books, will say he is posing questions "in a spirit of genuine inquiry".