Under the Government's forthcoming Crime and Disorder Bill, unveiled at the party conference this week, racial violence and harassment are set to become specific charges. Until now, racist motivation could not be considered when sentencing criminals. In future, courts will be expected to impose tougher sentences on racists.
Home Office minister Mike O'Brien said there was a need for "a maximum degree of co-operation" in the public sector, the voluntary sector, schools and agencies working with ethnic minorities if the new laws were to work.
He said: "We intend to get tough on bigots, thugs and racists. They will learn their lessons behind bars. However, these new laws will only work if used to their full potential. We expect schools to be at the forefront through anti-racist policies and practices."
The new moves come as the Government confirmed that Section 11 funds - financing language help for ethnic minorities - are to be saved. The Tories had announced plans to cut the scheme's budget from #163;83 million to #163;43m, making 7,000 teachers and classroom assistants redundant.
In his keynote speech to the conference, Mr Blair said: "That Tory cut will not stand. That money is not a cost, it is an investment. And it's one a civilised nation should make."
Mr Blair's comments took Home Office officials by surprise. Earlier in the week Mr O'Brien had said: "I get fed up by constant calls for extra funding for every little thing. Surely schools can fight racism without it costing anything? Section 11 is part of our budget review. I wasn't able to tick off boxes of the things I wanted to keep. We inherited massive difficulties in all areas of education. Sadly, we can't fund everything, no matter how much we want to."
The Crime and Disorder Bill will also include tougher sanctions for young criminals and their parents under proposals to reform the youth justice system which Jack Straw, the Home Secretary, claims are the most radical in 50 years.
In the first consultation document of the Bill, Tackling Youth Crime, the Government suggests reparation orders, curfews and ending the presumption that 10 to 14-year-olds cannot tell right from wrong.
The document says a disproportionate amount of crime is committed by a hard core of persistent young offenders with about 3 per cent responsible for 25 per cent of offences.
Punishment should include intervention to change the behaviour of young offenders. It says: "The aim must be to identify children and young people who are at risk of becoming involved in criminal activity and change their behaviour before bad habits take root."
Action plan orders would provide for intensive community activity combining reparation, punishment and rehabilitation. Parents would be involved in tackling problems such as truancy or drug abuse .
Courts will be able to impose curfews on children under 10 who are at risk of becoming involved in crime; and local authorities will be given new powers to impose local curfews on under-10s in public areas to deal with the nuisance they cause and avoid their picking up anti-social and criminal habits.
Police cautions would be replaced by a final warning scheme with children being given support and guidance to try to stop them committing another offence. But transgressors can expect "significant punishment from the courts".
Reparation orders would show young offenders the harm they had done and would require them to make amends, usually in the form of some hard physical work for 24 hours over three months.
Courts could also issue orders forcing parents to attend training and guidance sessions to help control their children.
The age of criminal responsibility will remain 10, but the courts should take account of the child's age and maturity, and not assume normal children are incapable of basic moral judgments, it says.
Responses should be sent by November 3 to Julian Walker, Home Office, Juvenile Offenders Unit, Room 371, 50 Queen Anne's Gate, London SW1H 9AT.