The law on prostitution is to be reformed under government measures announced last night that will result in thousands fewer offenders being sent to jail each year.

Ministers are also to scrap the term “common prostitute”, 183 years after it was first used in the Vagrancy Act of 1824.

The reforms are in Tony Blair’s 55th Criminal Justice Bill, which will also impose fines of up to £1,000 on people causing trouble on NHS premises, particularly in accident and emergency on Friday and Saturday nights.

Ministers are to overhaul the 48-year-old law on loitering for the purposes of prostitution in an attempt to encourage prostitutes to enter rehabilitation to deal with drug and alcohol abuse.

It will no longer be an offence to loiter, or solicit, for the purposes of prostitution unless a person does so persistently. Persistent is defined as loitering on “two or more occasions in any three-month period”. Even those convicted of persistent loitering will no longer face a fine or other penalty, but could be forced to meet a supervisor in an effort to rehabilitate them.

A spokesman for the Justice Ministry said last night: “The law is not being relaxed. It is defining what the term persistent means. In most cases people are not currently prosecuted until they have received at least two cautions.”

But ministers are carrying out further consultation on a controversial proposal for mini-brothels that would allow two women and a maid to operate legally from premises.

David Hanson, Minister for Justice, defended the decision to replace the term “common prostitute” with the word person, which was recommended as long ago as 1982.

He said: “I think what we need to get away from is labelling individuals.”

He said of the rehabilitation plan: “This will have the benefit of improving the lives of those who are involved in prostitution and also improving the communities in which prostitution occurs.”

A prostitute would be required to attend three meetings, at which they would be helped to deal with the causes of their involvement in prostitution including alcohol abuse and drug addiction.

Under the Bill, family and friends of patients who cause trouble also face fines of up to £1,000 if they also cause trouble. Mr Hanson said: “It is important that we look to tackle some of the issues that nurses and doctors face in the frontline of the NHS, particularly in accident and emergency and when individuals arrive in a state of alcoholic inebriation.

“There are a number of incidents where staff are threatened by the family, friends and others of those who have turned up at hospital.

“I hope this will set a standard which will put in place protection for nurses and doctors and say to those who come to hospital that we will not tolerate abuse or outlandish behaviour in the NHS.” He added: “I hope it will not be used.”

The Bill creates a new immigration status for foreigners who have committed terrorist or other serious crimes. It will be much more difficult for them to win the right to stay in Britain permanently. Offenders, such as those in the Afghan hijack case, who won a legal action against the Government which allowed them to stay, would be subject to a rolling system of permission to remain in the country.

Other measures include: stopping “plainly guilty” offenders having their convictions quashed as a result of procedural irregularities; increasing the amount of compensation which can be awarded to people wrongly convicted of crimes to £500,000; introducing violent offender orders, which will impose restrictions on people convicted of violent offences when they leave jail; and making it illegal to possess indecent photographs of children, even if they have been made electronically.

Explore Law

• Corporate Law

• Public Law

• Columnists

• Law Panel

• Student Law

• Law Reports

Times Recommends

• Future Stars of the Bar 2008
• Lawyer of the Week: Julie Morris
• Charging suspects - why it's a job for prosecutors