Doubling the number of former prisoners in work or training could save the taxpayer at least £1 billion a year, a new report says.
Of around 56,000 individuals released from custody every year, only four in 10 - or 24,000 - end up in employment, education or training, according to analysis by the charity Unlocked Graduates.
The cost to society of re-offending is thought to be as high as £15 billion every year.
Unlocked Graduates pointed to figures suggesting that ex-inmates are 7.5 percentage points less likely to re-offend if they are in work.
It calculated that, on an "ultra conservative" estimate, the Government could make an annual saving of £1 billion if 1,800 fewer prisoners re-offend.
Natasha Porter, chief executive of Unlocked Graduates, said: "There are a number of reasons why former prisoners reoffend but it is clear is that when these men and women are in work, they are less likely to commit another crime.
"Supporting prisoners into work has the potential to save the taxpayer huge amounts of money every year.
"Work will also offer former prisoners the chance to reintegrate into society, giving them a chance to start over.
"While employment offers former prisoners the opportunity to reintegrate back into society, education is the gateway which gives them a real chance of finding work when they leave prison.
"With such clear evidence about the importance of work in reducing reoffending it is critical that we find ways to improve access to education as well."
The Government has announced a number of measures as part of attempts to drive down re-offending.
Figures show that almost half of adults leaving prison commit a new offence within a year of being released.
Justice Secretary Liz Truss said Unlocked Graduates is "absolutely right that we must do all we can to tackle the £15 billion annual cost to society of criminals who reoffend after release".
She added: "I have been clear that our prisons must become places where staff are empowered to get people off drugs, improve their English and maths and get a job on release.
"Alongside our work to boost staffing numbers and make prisons places of safety, these reforms will help offenders turn their lives around and create safer communities."