The additional responsibility for councils was outlined in the government’s response to a consultation on the sentencing green paper launched last December and set out in the Sentencing and Legal Aid Bill.
Also in the bill are plans for local authorities to become financially responsible for all young people held on remand, in an attempt to reduce numbers.
Meanwhile remand places will only be used where it is necessary to protect the public.
Other reforms in the bill include:
Justice Secretary Kenneth Clarke said the priority behind the reforms is public protection and cutting crime.
"As well as hard work inside prisons, we will introduce for the first time a focus on the most effective means of reducing reoffending, and have made clear that we will pay providers for services that successfully protect the public from repeat criminals," he said.
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