Sources at Westminster suggested that the outgoing Prime Minister has refused to sanction the proposals from Lord Chancellor Lord Falconer, who heads the new Ministry of Justice set up this week.
The independent Sentencing Advisory Panel is considering responses to its consultation period on the proposals and could report as early as next month. However, any proposals would still need to be acted upon by the Government.
Plans to scrap the penalty of imprisonment were revealed last August in an attempt by the Government to reduce pressure on prison places. However, they provoked fury among retailers, which accused politicians of failing to take the impact of retail crime seriously.
'Retailers and their staff need to be reassured that serious persistent offenders will go to prison for enough time to provide respite to victims and deliver proper rehabilitation for the criminal,' said BRC director-general Kevin Hawkins.