Every prisoner released in England and Wales should have a mentor to help get his or her life back on track, the justice secretary says.
Chris Grayling said the plan would be co-ordinated by private and voluntary sector groups who would be paid if re-offending was reduced.
The mentors would help with finding housing and training opportunities.
Probation officers welcomed the idea but expressed doubt about whether enough mentors could be found.
Almost half of adult prisoners are re-convicted within a year of release and, like his predecessor Ken Clarke, Mr Grayling has made tackling reoffending a priority as justice secretary.
In his speech on Tuesday, Mr Grayling said he would be expanding the government's use of payment-by-results to organisations which delivered cuts in reoffending.
Only those who are jailed for more than a year are currently provided with opportunities to join rehabilitation programmes. The government says it wants all but the highest-risk prisoners to be in programmes by the end of 2015.
Mr Grayling said: "When all we do is just take those people, release them onto the streets with £46 in their pockets and no other support, why are we surprised that they reoffend again quickly?
"Whether you are the hardest of hard-liners on crime, or the most liberal observer, every single one of us has a vested interest in an enlightened approach to reducing reoffending. We can't just keep recycling people round and round the system.
"When someone leaves prison, I want them already to have a mentor in place to help them get their lives back together. I want them to be met at the prison gate, to have a place to live sorted out and above all someone who know where they are, what they are doing, and can be a wise friend to prevent them from reoffending.
"Often it will be the former offender gone straight who is best placed to steer the young prisoner back onto the straight and narrow - the former gang member best placed to prevent younger members from rushing straight back to rejoin the gang on the streets.
"There are some really good examples out there of organisations making good use of the old lags in stopping the new ones. We need more of that for the future."
Youth custody review
Mr Grayling said he had also launched a review of youth custody because the average cost of £100,000 per detained offender was a "bad return on investment". He said the review would focus on how to better educate and rehabilitate young offenders, rather than just locking them up.
Shadow justice secretary Sadiq Khan said that Labour supported attempts to rehabilitate offenders - but said the government's numbers did not add up, because the Ministry of Justice was losing a quarter of its budget and thousands of staff.
"If Chris Grayling is proposing to include an additional 50,000 jail-leavers in rehabilitation programmes and to have an army of more than 60,000 mentors, then he needs to come clean about how this will be funded.
"If it means that resources for existing rehabilitation programmes are going to be cut further or spread more thinly to pay for it, the fear is under-resourced rehabilitation programmes won't be effective in stopping jail-leavers from returning to a life of crime."
'Army of volunteers'
Just over 86,000 people left jail in the 12 months to June 2012. Four out of 10 prisoners serve sentences of six months or less. Harry Fletcher, of the National Association of Probation Officers, said the idea of mentors was "excellent" but he thought it would never happen because so many prisoners were released every year.
"You'd need an army of volunteers or employees of private companies to do it properly," he said.
Others fear reform of the probation service is happening too fast.
Sue Hall, from the Probation Chiefs' Association, said: "If payment by results is to be brought in for rehabilitation by 2015, that's a very tall order and any change that is coming in as quickly as that does run a risk of destabilising the system and if that happens then people could be at risk."