The government wants to overhaul criminal law and abolish controversial suspended fines only three years after their introduction.
Justice Minister Eveline Widmer-Schlumpf said experience and public criticism had shown that the system was not working and had failed to convince the general public.
The government says it wants to give the courts a broad range of sentencing possibilities - ranging from prison sentences to community work and electric monitoring of convicted criminals.
However fines, that have to be paid and cannot be suspended, will still be possible for sentences of up to 180 days.
Widmer-Schlumpf said she did not expect a dramatic increase in the number of prison inmates.
Most of the leading political parties welcomed the proposal, but the centre-left Social Democrats said they were sceptical.
Parties and organisations as well as cantons and other institutions have three months to give their opinion in a consultation procedure. The cabinet will then present a bill to parliament.
Urs Geiser, swissinfo.ch and agencies
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