Police bail will be capped at 28 days and only extended following a review by a senior-ranking officer if the Conservatives come to power after the general election.
Pre-charge bail will only be extended beyond 28 days and up to three months following a review by a superintendent as part of a package of reforms announced by Home Secretary Theresa May.
Any application to extend pre-charge bail beyond three months would have to be approved by a magistrate, Mrs May added.
Earlier this month, broadcaster Paul Gambaccini backed a limit on the use of police bail as he told MPs how officers and prosecutors "sat" on him for 12 months before telling him he would not be charged in relation to an allegation of historic sex abuse.
The Home Secretary said: "I have been clear that it is simply not acceptable for individuals to spend months and in some cases years on pre-charge bail, with no system of review, only for charges never to be brought against them.
"I will bring forward legislation to set a clear 28-day limit for pre-charge bail in all but the most complex cases and introduce regular scrutiny from the courts for any application to extend pre-charge bail beyond three months.
"These measures, alongside a new presumption to release without bail at all, will drive down the inappropriate use of pre-charge bail and ensure that decisions to release suspects with pre-charge bail conditions are taken only where it is necessary or proportionate.
"The changes that do not require legislation, such as the production of guidance and the collection of data, will be taken forward straight away."
Other measures announced by Mrs May included setting a presumption to release without bail with bail only being imposed when it is both "necessary and proportionate".
She said a framework for regular review by the courts of pre-charge bail is to be set up under the reforms as well as introducing formal guidance on the imposition of conditions.
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