The ex-minister Chris Huhne and his erstwhile wife Vikky Pryce were sentenced to 8 months imprisonment for perverting the course of justice (http://www.standard.co.uk/news/crime/chris-huhne-and-vicky-pryce-jail-sentences-not-unduly-lenient-8546334.html). No, hang on, they have really been sentenced to probably two, possibly three months inside with perhaps a month or two with a tag and a curfew. This fudging of reality is undermining the English justice system.
The fact that a headline prison sentence is wildly different from the time actually served is probably the main reason why public confidence in the justice system is so weak. It is not that the public necessarily want longer sentences. Rather, it is the effect of judges saying, for example, five years when what they probably mean in practice is two years in prison that makes the public think that the criminal is getting away with it. Much better to say the sentence is two years because then there is no sense in the public mind of any discount on what should have been given. Nor would the public be confused as to what a sentence actually was, something which is the case now with members of the public very often being unsure of how much time is remitted from the headline sentence.
The objection normally given to the headline sentence being the actual sentence to be served is that there would be no incentive for prisoners to behave whilst in prison. This objection does not hold water. If prisoners commit a criminal offence whilst in prison they can be tried for that which is a pretty big incentive for most prisoners as they will not be serving long sentences. Even for long term prisoners there is a good deal of leverage for the staff because they hold the threat of the withdrawal of privileges as penalties. It would also be possible to create a new criminal offence of persist refusal to obey orders for prisoners who are the most wilfully disruptive. There would be nothing novel in the idea of persistent behaviour being required for a criminal offence. There is no absolute requirement on a police officer to take any action if a minor offence is committed, for example, a police officer will often tell someone to stop disturbing the peace and if they do that is the end of the matter. Some laws, such as those dealing with harassment require repeat behaviour for an offence to be committed. There really is no reason to believe prison staff would be left without enough leverage to ensure good prisoner behaviour.
Using the Huhne/Price case as an example, the judge to be able to say when giving sentence “You will serve 4 months in prison conditional on your good behaviour whilst there. Any misbehaviour may result in loss of privileges or in extreme cases a criminal charge resulting in further time served.”
It is possible that there might be some increase in the length of time prisoners’ served under such a regime, but that is unlikely to be a massive problem for short term prisoners (the vast majority) because you can put them in an open prison and most will stay there because it is just not worth escaping. Open prisons are cheap to create and run: closed prisons are the reverse.
I cannot really see any alternative to prison in terms of convincing the public that crime really does not pay. Polls consistently show the public have contempt for non-custodial sentences and it is hard fact that fines frequently remain unpaid  and community work sentences undone or are ineffective in reducing further offending . As things stand the non-prison penalties given out by the English justice system is too complicated and bureaucratic for most people to understand or, even if they do understand, to have much credence to as a punishment. Anything other than prison is generally viewed as a soft option.
The way to tackle the general problem of a large prison population is to reduce crime. This could be done in half a dozen ways. Removing the mentally ill from prison and treating them as ill rather than criminal would be a good start. Legalising all drugs would reduce the prison population radically (in 2002 the Audit Commission estimated that half of all crime in England Wales was drug-related including drug related offences or offences committed to gain money for drugs); ending immigration would cut off another large slice and deporting immigrants who have committed crime would remove many offenders. Ensuring all children of normal mental function had mastered the three Rs by the time they had left school so they were employable and creating a high wage economy by tightening the labour market would reduce the need and temptation for crime.