Liverpool and Doncaster could soon host Britain's first Dutch-style red-light districts, under radical proposals unveiled today by David Blunkett, the Home Secretary.

Other options mooted by the Home Office include tolerance zones for streetwalkers and allowing councils to license brothels to break "the stranglehold of pimps".

The proposals come in a 114-page Green Paper or consultation document. Mr Blunkett described it as an attempt to develop "a realistic and coherent strategy to deal with prostitution and its detrimental consequences for individuals and communities".

The paper examines schemes introduced around the world to control prostitution, including legalised brothels in the Netherlands, Australia and Greece and "managed areas" or red light districts.

"There has been considerable enthusiasm expressed for managed areas in both Doncaster and Liverpool, where local agencies have been struggling to deal with the issues arising from street-based prostitution," the report said.

"In both places it is suggested that managed areas could bring significant benefits, providing greater safety and fewer stigmas for those who engage in prostitution by choice.

"What is proposed is a formalised 'red light' area, where those involved in prostitution and their users are permitted to trade in a defined area regularly monitored by the police and provided with drop-in health services and other facilities.The model is based on the zones that have been operating in a number of Dutch cities."

Officially, the Home Office consultation period lasts until November, but Mr Blunkett made clear that he would not stand in the way if Liverpool or Doncaster wanted to set up red light districts before then.

Supporters of the idea in Liverpool say that the brothels should be concentrated in non-residential industrial areas near the city centre.

In a statement accompanying the paper, Mr Blunkett said: "I am aware that some towns are keen to introduce a managed area as a control measure. Managed areas are said to provide greater safety for those involved and to limit the impact on local communities.

"However, there is an opposing view, equally forcefully expressed, that such areas are difficult to introduce and maintain and that they lead to degradation and squalor on our streets."

Currently, prostitution is not illegal, but pimping, or living off immoral earnings, is. The Green Paper emphasises that a large proportion of British prostitutes are also heavy drug-users - their drug habits being used both to entice them into prostitution and to keep them there.

Caroline Flint, the Home Office Minister, said that some red light districts in Holland had been closed because they simply did not work - and the Government needed to be persuaded that the could be useful before it supported them.

But she added: "It's no joke if you have got active prostitution on your doorstep. We're talking about people having sex in people's front gardens, leaving debris and needles. For anybody living in these neighbourhoods, we have to understand the stress and horror of dealing with this day in, day out."

The proposals were broadly welcomed by prostitutes themselves, who said their profession needed to be fully decriminalised.

"The abolition of prostitution laws that make it illegal for women to work on the streets, make it illegal for women to work together from premises and all those associated laws - that in itself would actually decrease women's vulnerability to violence," said Nicky Adams of the International Prostitutes' Collective.

"Women would no longer be labelled as criminals, which sends out a signal that women's lives don't count for much and is definitely an encouragement for violent men to attack, rape and even kill women, and for the police and courts to stand by and let it happen."

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