Offenders would be allowed to "defer" prosecution under sweeping justice reforms proposed by a landmark review.
Instead of entering a plea, those facing charges for low-level crimes would receive targeted rehabilitation such as drug or alcohol treatment.
Individuals who successfully complete the programme would see the prosecution dropped, while those who failed to comply would face criminal proceedings.
The model is one of 35 recommendations made in a review into the treatment of, and outcomes for black, Asian and minority ethnic (BAME) people in the criminal justice system.
Led by Labour MP David Lammy, the inquiry concludes that BAME individuals "still face bias, including overt discrimination, in parts of the justice system".
It flags up a raft of data pointing to BAME disproportionality in the courts, prisons and probation service, which is said to cost the taxpayer more than £300 million a year.
The report cites studies suggesting a "stark difference" in plea decisions between different ethnic groups.
One found that between 2006 and 2014, BAME defendants pleaded not guilty to 40% of charges, compared with white defendants doing so for 31%.
Defendants convicted after a trial are likely to face tougher punishments than if they admit guilt early on.
Mr Lammy said: "Many BAME defendants simply do not believe that the justice system will deliver less punitive treatment if they plead guilty."
His assessment suggests the deferred prosecution model could help address the "chronic trust deficit" by taking plea decisions out of the equation.
It calls for the introduction around England and Wales of a scheme piloted in the West Midlands, which found violent offenders dealt with by deferred prosecution were 35% less likely to re-offend, as well as higher levels of satisfaction among victims.
The Lammy review, which mainly covers England and Wales, also:Raises concerns that the BAME proportion of youth prisoners increased 25% to 41% from 2006-2016 despite an overall fall in under-18s in custody;
Finds that in most cases defendants' ethnicity does not affect the likelihood they will be charged but flags up "worrying disparities" in prosecution rates for rape and domestic abuse;Cites analysis showing that, while there was no statistical link between ethnicity and the likelihood of receiving a prison sentence for acquisitive violence and sexual offences, the odds of being given a custodial punishment for drug offences were around 240% higher for BAME individuals.
Mr Lammy said: "It is only through delivering fairness, rebuilding trust, and sharing responsibility that we will build the equal and just society so often spoken about."
He acknowledged there is "only so much" the criminal justice system can do.
"Communities must take greater responsibility for the care and development of their people - failing to do so only damages society as a whole," the MP said.
His blueprint also proposes the introduction of a US-style system for "sealing" criminal records.
In this situation, a judge or independent body would assess an ex-offender's case and if they were found to have reformed their criminal record would still exist but they would not need to disclose it when applying for jobs, and employers would not be able to access it.
Justice Secretary David Lidington said the Government will "look very carefully" at the review's findings and recommendations before responding fully.