Ministers are exploring whether firms should be offered financial incentives to recruit ex-offenders.
Options being considered include reducing National Insurance contributions if employers take on former prisoners.
The plans emerged as part of the government's response to a report from the Work and Pensions Select Committee, which calls on ministers to provide more support to ex-offenders.
Ministry of Justice officials also promised to explore proposals that would remove criminal record disclosure in all public sector roles, with certain exceptions.
The report warned that ex-offenders face substantial challenges after leaving prison, including securing a home and a job, potentially increasing the level of repeat offenders in the system.
Committee chair Frank Field said: “We have already welcomed the moves toward a comprehensive strategy for those leaving prison. But if the justice secretary is to get the numbers in prison down, the best route is to prevent the high re-offending rates.
“Once the government adopts our report in full it will have the basis of an effective strategy to cut the supply route to re-offending.”
A government spokesperson said: "We want prisons to be places of hard work and high ambition, with incentives for prisoners to learn so when they leave custody they can enter meaningful employment.
"We've helped at least 9,500 former prisoners into long-term employment since 2012, but there's a lot more to do.
This year we will publish a prisoner employment strategy and our 'See Potential' campaign is encouraging businesses to utilise ex-offenders' skills."
Mark Sands, City AM