Community groups will be able to tell courts about the impact of crime in their area before sentence is passed under a new pilot scheme announced by Constitutional Affairs Minister Harriet Harman.
Residents will also have new powers to request the work they want offenders with non-custodial sentences to carry out locally.
The moves are intended to bolster public confidence in the criminal justice system as ministers seek to regain the initiative in the row over prison overcrowding and sex offenders.
Until now courts could only hear from individual victims when assessing the impact of a crime.
The Government believes community impact statements will provide a fuller picture of how a crime has affected those who live and work in the area.
Ms Harman said: "We will be trying out how community groups like the parish council or tenants' and residents' associations will be able to tell the court about how crimes affect the local community."
There will also be an extension of the "community payback" scheme to highlight the unpaid work carried out by offenders and to give local people the chance to decide what projects are chosen.
Ministers argue that community sentences play an important role in reducing re-offending and enable offenders to "repay" the community, but are aware the public often regards them as a soft option.
Ms Harman said: "We want the public to have confidence in the greater use of non-custodial sentences. That means that when the court orders a fine, it must be paid, when it orders compensation to the victim that must be paid and when it orders an offender to do work they must do it and the community must be able to see that the work has been carried out."
She added: "Unpaid work can help local communities and give offenders experience of hard work. But it should be work that the local community tells the court that it wants done and the local community must be able to see that it has actually been carried out."
