The Lord Chancellor has called for "fundamental" changes in the way legal aid is awarded, following the publication of proposals to cut ?100 million a year from the annual budget.
Lord Carter of Coles, a Government adviser, today published a series of radical recommendations to reform the way legal advice is paid for by the taxpayer in England and Wales.
Lord Falconer, the constitutional affairs secretary and Lord Chancellor, has pledged to introduce the reforms "as quickly as possible".
The changes include a new fixed fee scheme for lawyers in police stations, to be introduced by next April. This would replace the current system under which lawyers are paid by the hour.
Full price competition between law firms would then be introduced from 2009.
This would see lawyers bidding for batches of cases in police stations which they would then see through into magistrates' and Crown Courts.
The 62 recommendations would strip ?100m from the rapidly expanding criminal legal aid budget, so it can be redirected to cash-starved civil and family work, according to Lord Carter.
He pledged that the reforms would reduce criminal legal aid spending by more than 20 per cent over the next four years.
Lord Falconer, the constitutional affairs secretary and Lord Chancellor, said in a statement today that sweeping changes to the legal aid system were necessary in light of growing financial pressures.
"Lord Carter calls for fundamental reform of the legal aid system and we thoroughly endorse the need for that reform," he said.
"If we don't reform it along the lines that Lord Carter suggests, then there won't be the access to the system, it will get out of control and we won't have a sustainable providers market."
Lord Carter said that he hoped his reforms would prevent some barristers from making an "unreasonable" amount of money from legal aid.