The home secretary has announced a significant shake-up of the laws governing charitable donations.

On Wednesday, David Blunkett detailed proposals to establish a new legal definition of charity.

Qualifications will include the prevention and relief of poverty, the advancement of education, religion, health, science, culture, sport or environmental concerns.

Other issues include social or community advancement, the provision of social housing and promotion of animal welfare.

In a move aimed at improving public trust in the sector, larger charities will have to publish details of their financial performance and effectiveness.

They will also have to state their policies regarding the ethics of their investments.

Under the reforms a system of good practice in fundraising will be established.

Unless charities can agree to a voluntary code of conduct, Blunkett warned he will impose a compulsory scheme.

A new Charity Commission will also be created with a larger board.

Reporting to parliament on its objectives, the commission will issue reports on the performance of certain areas of the charity sector.

The threshold for registering charities will increase from £1000 to £5000, while independent tribunals will be available to appeal against decisions made by the regulator.

"More than half a million organisations - charities, community and self-help groups, social businesses - are active across every area of our national life, helping to transform the lives of citizens and to revive communities," said Blunkett.

"The charitable and not-for-profit sector in this country is one of our greatest assets. High levels of public trust and confidence are vital to its continued success, and its success is essential for the health of our democracy.

"These reforms highlight the public character of charities and their role as a force for good in society, enabling them to be more effective in their work."

Home Office minister Fiona Mactaggart promised that the reforms will give charities greater freedom.

"We will cut red tape for charities, freeing tens of thousands of small charities from the need to register. And people will have better access to information about charities," she said.

"These changes will help charities to continue to make our society better in many different ways."