Radical proposals to close all 13 women's jails in England and Wales and replace them with small house units holding up to 20 offenders were today rejected by the Government.

A working party within the Ministry of Justice finally buried the key plan from a review of women in the justice system after concluding that shutting the existing jails over the next decade and replacing them with up to 150 smaller units was impractical.

Today's announcement is a bitter blow to penal reform groups who had put their trust in key female members of the Government, including those in the Justice Ministry and Attorney-General's office, being able to deliver the biggest shake-up in the way female offenders are treated in prisons.

Instead the Ministry of Justice highlighted initiatives to support women including pilot projects in five jails in which a new search technique is being used which does not require them to remove their underwear.

The women's prison population is currently 4,502 — three lower than the all time record — and Ministry of Justice sources said that no women’s jails are to close.

Baroness Corston proposed closing women’s jails and replacing them with a network of small units located in city centres and run by families of women but even as her report was published last year Ministry of Justice sources made clear there was no money to implement such an ambitious and controversial proposal.

The Ministry of Justice review concluded that the model of small units would be unable to provide on site all the facilities needed to support and help women prisoners including making it easier for families to visit and meeting their resettlement needs. Although the review team accepted the principle of small units it said there were weaknesses including providing the full range of services including education, drug treatment and running courses to deal with the offending behaviour.

"A particular risk would be to the delivery of small scale services to meet particularly complex needs, as we may not be able to gather enough offenders in any one location to deliver efficiently without increasing movement around the estate," the Justice Ministry said today.

It also said that some women consulted about the proposal had expressed concern about the increased likelihood of bullying in a potentially claustrophobic environment of small units.

The Justice Ministry also said that creating small units might mean women having to be moved more frequently to other units where services for particular problems such as drug and alcohol abuse are available.

It also warned that there would a significant challenge for the prison service to handle high to low risk women offenders in up to 150 units around England and Wales.

Instead of the radical reform outlined by Baroness Corston, the Ministry is to create a 77-place wing within Bronzefleld women's jail in Middlesex which has been designed specifically to meet women’s needs. At two other women's prisons accommodation is to be provided adjacent to the jail for women to spend time with their children.

The Prison Reform Trust, a penal reform group, said that progress towards implementing the proposals from Baroness Corston's review was painfully slow. Juliet Lyon, director of the trust, said: "‘It’s clear that this government is so busy planning how to waste billions of public money on so-called ‘Titan’ prisons that it cannot find the time or money to create a decent, effective justice system for women. A national network of women’s supervision and support centres would enable women offenders to beat addiction, receive mental healthcare, get out of debt and gain skills to work and look after their children."

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