The government aims to reduce reoffending by 25 per cent with a raft of budget initiatives.
Corrections Minister Anne Tolley says the target can be achieved by 2017, and by that date the number of prisoners can be cut by 600.
The budget is going to shift $65 million into new rehabilitation programmes by "reprioritising" the department's resources.
"It's time to get serious about breaking the vicious cycle of prison and reoffending," Mrs Tolley said on Monday.
"Offenders need to be held accountable for their crimes but while they're in prison we must do more to rehabilitate and reintegrate them."
The plan includes:
* 33,100 more offenders will receive drug and alcohol treatment in prisons
* 7855 more prisoners and community offenders will receive rehabilitation services
* 2950 more prisoners will be in education and employment training - a 30 per cent increase
* 7500 more prisoners and community offenders will be supported to find "real jobs"
* 6000 more prisoners and community offenders will have access to reintegration support programmes.
"Corrections has looked thoroughly at the waY it operates as part of an expenditure review and has identified the best investments to reduce reoffending," Mrs Tolley said.
"We know that two-thirds of prisoners have addiction problems and up to 90 per cent can't read or write well."
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