Tony Blair announced a major overhaul of the criminal justice system on Monday stressing that the government wanted to see "an end to fatalism" about law and order.

He set out a £700 million programme to target a 100,000-strong "hardcore" of offenders and announced a new policy to deliver harsher sentences for those who commit persistent offences.

The prime minister announced 2,500 extra jail places and a beefed up prosecution service to improve conviction rates.

The new policies were unveiled at Pentonville prison in London where Blair, the first serving prime minister to go into a prison, met prisoners and staff.

"Today the home secretary sets out a series of measures for action and consultation. Some, in regard to these areas of the criminal justice system within Lord Justice Auld's remit, will await his report. But taken as a whole, the measures propose: changes to sentencing, rules of evidence, the treatment of offenders on drugs, bail, the CPS, greater investment in policing and greater numbers of police. There are specific measures to tackle organised crime which needs a new approach in the face of a wholly new phenomenon connected with drugs, money laundering and illegal immigration. There are new rights for victims, better protection for witnesses and new ways for the courts themselves to operate," Blair said.

Outlining the 10-year plan in the Commons by Monday afternoon the home secretary, Jack Straw, said that although the government's anti-crime strategy was bearing fruit for the criminal justice system which over the last 20 years, he said, had not kept up with long term trends and new types of crime.

Condemning the "legacy of failure" bequeathed to the Labour government, Straw outlined an approach based on four themes: crime prevention; catching and convicting more offenders, especially persistent offenders; ensuring that punishments fit the criminal as well as the crime; and radically improving treatment for victims.

Promising MPs that the entire active criminal population would be on the DNA database by 2004, the home secretary challenged the criminal justice system to increase the number of recorded crimes ending in an offender being brought to justice by 2004 by 100,000.

Going on to blame the "badly organised and under-resourced'' prosecution service set up under the Tories in the 1980s for declining conviction rates Straw promised tough new measures to convict more offenders.

Persistent offenders will face harsher punishments with courts using a points style system to assess previous crimes before sentencing and jurors may be told about past offences before deciding whether to convict. Defence lawyers will have to hand over all their evidence to prosecutors and prosecution lawyers will receive specialist training to help them work in specialised drug and fraud courts.

Government sources believe the renewed focus on crime will help to confirm Labour's image as the party of law and order, but will run the risk of angering groups, including prisons inspections chief Sir David Ramsbotham, who believe that simply locking more people up is not the answer to the UK's crime problem.

The announcement comes as leaked memo from a Home Office special adviser suggests the government could be perceived as being soft on crime.

The shadow home secretary, Ann Widdecombe, has attacked Labour on crime. Speaking to the Today programme on Monday, she said: "I think Labour are in a panic. We have had four years of failed initiatives. Labour promised to be tough on crime and tough on the causes of crime. The question today facing the electorate is whether Labour has delivered on that or whether they have squandered the legacy of our last four years."

The Lib Dems say the problem will not be solved unless the government gets significantly more police officers on the streets. Simon Hughes said on Monday: "One of the great disappointments of the Labour government is that, having made that famous pledge to be tough on crime and tough on the causes of crime, we have seen police numbers have fallen by thousands. That is both foolish and against what the public want.''