The Prime Minister said that criminals should "pay for their crimes" and that community sentences are currently a "soft option".
Senior government sources have disclosed that a "new generation" of tags will form the centrepiece of the new system. Ministers want to allow the use of so-called "sobriety" tags which remotely monitor whether a wearer has been drinking alcohol.
These can be used to ban criminals from drinking alcohol - or to restrict drinking to certain permitted times of the day or week. Those breaching the terms of their punishment will be sent to prison.
Criminals will also be fitted with GPS devices which will track their movements 24 hours a day. The "virtual prisons" will mean offenders are only allowed to leave their homes at certain times of the day and will be subject to evening or weekend curfews. The tags can also be used to bar criminals from going to football matches, city centres or local pubs.
A new Justice Bill is expected to be included in the Queen's speech in May and the Government will legislate on the community sentences in the summer.
It is understood that the sentences, once toughened, will increasingly be used in preference to prisons as ministers seek to save billions of pounds and reduce levels of re-offending.
Speaking on the plane returning from his official visit to the US, Mr Cameron said that tougher community punishments were necessary.
"For too long, community sentences have been seen as, and indeed have been, a soft option," he said. "This government wants to change this and make them a proper and robust punishment."