Police stop and search powers in England and Wales are to be overhauled with a revised code of conduct, Home Secretary Theresa May has said.
She told MPs an inquiry had found 27% of searches may have been illegal.
She said that if the number of stop and searches did not now come down, she would seek to change the law.
The move follows a consultation, which highlighted concerns that stop and search was used too widely and was unfairly targeting ethnic minorities.
Labour say the plans do not go far enough.
'Affront to justice'
Recent figures show only about 10% of more than a million searches lead to an arrest, with black people six times more likely to be stopped than those who are white.
At present, police can stop someone if they have reasonable grounds to suspect they are carrying illegal drugs, a weapon, stolen property or something which could be used to commit a crime, such as a crowbar.
However, under Section 60 of the Criminal Justice and Public Order Act, officers can also stop and search someone without suspicion that they are involved in wrongdoing if approved by a senior officer, for example, because there is a fear that serious violence could take place.
Mrs May said when misused, stop and search was an "enormous waste of police time" and "hugely damaging to the relationship between the police and the public".
She referred to a recent inquiry by Her Majesty's Inspectorate of Constabulary (HMIC), which found that more than half of all forces in England and Wales were ignoring some rules on stop and search.
"It is very clear that in a large number of cases the reasonable grounds for suspicion were not there and one can only therefore assume, given that black people are six times more likely to be stopped and searched than a white person, that it is precisely the fact that they are a black person that has led to that stop and search taking place.
"It is absolutely disgraceful and sadly... this is a feeling that has come through to young people in black and minority ethnic communities that this is what happens and that this is, if you like, a way of life."
Under the new plans:
- Alex Marshall, chief executive of the professional standards body the College of Policing, will review stop and search training for all forces
- Officers will have to sit assessments on whether they understand the rules on stop and search and will have to account for their actions if there are community complaints
- Police could face disciplinary action if they misuse their powers - or be barred from using them altogether
The BBC's home affairs correspondent Danny Shaw said the home secretary had wanted to go further, but her original proposals were blocked by Downing Street which was worried they might leave the Conservatives looking soft on crime in the run-up to the general election in 2015.
Responding to Mrs May in the Commons, shadow home secretary Yvette Cooper asked her: "Why aren't you banning the use of targets given to police officers to stop and search a certain number of people?
"Why won't you put the guidance on race discrimination on a statutory basis?
"And why won't you insist that all forces abide by case law rather than some?"
She added: "Your plans have been frisked of serious substance and we need to know why you have backed down."
"Your advisers have blamed 'regressive attitudes in No 10'. But why have you listened to them?"
Rachel Robinson, policy director at campaign group Liberty, said the proposals were "a half-hearted mix of voluntary, patchy measures", adding: "Public trust is wearing thin and today was a missed chance for real change."
Labour's Diane Abbott, who was Britain's first black woman MP, said successive governments had "failed to act" on the problem, so Mrs May deserved "some credit... for having taken things as far as you have done".
"There is no single issue that poisons relationships between urban communities and the police more than stop and search," she told the Commons.
Conservative Charles Walker gave an example of one of his constituents who had been stopped 50 times between the ages of 13 and 18, adding that he would have a sense of "total desolation and alienation" if that had happened to one of his children.
Mrs May said a consultation held last year in England and Wales into stop and search attracted more than 5,000 responses and found very different attitudes towards the practice.
Seventy-eight per cent of those aged between 55 and 74 thought it was an effective tool, but just 38% of those between 18 and 24 agreed.
Of white respondents, 66% believed it was effective, compared with 38% of black respondents.
The Metropolitan Police said stop and search was increasingly being used in a more targeted and effective way, but it recognised there was "much more to do to improve confidence across all communities in the use of the powers".
Shauneen Lambe, executive director of campaign organisation Just for Kids Law, told the BBC: "Obviously, we think it's great that it's finally been recognised that stop and search has been used discriminatorily and unnecessarily, but our concern is how well these plans will be implemented.
"I think that with an intent and an ethos things can change, but we do feel their need to be greater sanctions for misuse too."