The Scottish Government's decision to drop its plans to build a new women's prison is a welcome and thoughtful move and a rare example of government listening to public concern and accepting that a U-turn was needed.

But the scrapping of the prison should only be the beginning - a first step in a fundamental rethinking of Scotland's penal and judicial policy on female offenders.

The proposed prison at Inverclyde, which would have replaced Cornton Vale, was founded on good intentions. Cornton Vale had been declared unfit for purpose by Dame Elish Angiolini's 2012 Commission on Women Offenders and has long been a national disgrace: in the 1990s it became infamous for its suicide rates, but it has consistently struggled to provide the kind of prison provision that is needed in the modern world.

The intention was to make Inverclyde different by designing an environment based more on the principles of rehabilitation than punishment. In itself, that was the right approach, but the problem with Inverclyde was that, with up to 350 beds proposed, it was far too big and based on the troubling premise that the number of women being sent to prison would continue to rise and therefore more prison space was needed.

The risk in going ahead with the plans was that they would encourage the numbers to rise further and undermine attempts to promote alternatives to custody that are required for most female offenders. Prison will probably always be needed for a tiny number who have committed very serious offences or are a danger to the public, but a large proportion of the offences committed by women are either crimes of dishonesty such as shoplifting or drug offences and prison does almost nothing to address the fundamental causes: poverty, abuse, and the misuse of drugs and alcohol.

In dropping the plans for Inverclyde, it looks like the Scottish Government has finally acknowledged change is needed. In announcing the decision, the Justice Secretary Michael Matheson said a more radical approach was needed and that too many low-level female offenders were being sent to prison.

These are welcome words, and an overdue response to the persistent concerns raised by the likes of the Howard League for Penal Reform, but more action is now required. Firstly, new plans for a replacement for Cornton Vale will have to be drawn up. This should be much smaller and it should learn the most important lessons from the Inverclyde experience, and should probably be based either in Glasgow or Edinburgh, along the lines suggested by Dame Elish three years ago. There should also be a number of regional units to hold those on remand or those serving shorter sentences. And all of it has to be done quickly so women are not stuck in Cornton Vale for years while the options are discussed.

Additionally, greater use should be made of community-based alternatives. The Angiolini report concluded most female offenders do not need to be sent to jail, but more work is still needed on promoting, developing and funding good alternatives such as tagging or drug treatment programmes. The Scottish Government appears to have accepted this and has made the right decision in scrapping Inverclyde, but it must not leave a vacuum in policy. In the place of the new prison, there has to be a new, properly funded strategy - a genuine shift from a custody-centred approach to a more progressive community-based policy that aims to reduce offending and ensure that, in the future, Scotland's prisons are more progressive - and much smaller - than they used to be.