Under a new law, the Prisoners' Earnings Act, inmates earning more than £20 ($31, 23 euros) a week after deductions will see 40 percent decucted from what remains. Ministers expect the scheme to bring in up to £1 million per year and affect about 500 inmates.
The government is looking at extending the idea to prisoners who work inside jails, but their average wages are around £10 a week. "For too long the financial burden of repairing the damage done by crime has fallen to the taxpayer alone," Policing Minister Nick Herbert.
"Making offenders pay financial reparation to victims will require them to take personal responsibility for their crimes and go some way towards making redress to victims through the funding of crucial support services."
However, Juliet Lyons, director of the Prison Reform Trust campaign group, said it was important that inmates were not put off working. "It's always a problem if people leave prison with absolutely nothing. It's likely to cause further offending," she told the BBC.
"A scheme like this has to be thought through carefully so that money is set aside for victims but that we also pay attention to resettlement."
The prison population in England and Wales is at a record high of 87,214 following thousands of arrests linked to the riots which shook England in August, Ministry of Justice figures showed Friday.