The government has launched its first rethink on prostitution in generations, saying brothels could be decriminalised.
Prostitution: Local councils are pushing for reforms
Home Secretary David Blunkett says he wants to meet head-on "the devastating consequences of prostitution".
But he says communities must also decide whether, as a nation, we accept or challenge the sex trade.
Ministers have pledged that any possible new laws would target organised crime and pimping.
Official estimates suggest there are 80,000 people involved in prostitution in the UK - four out of five of them women. The report is looking at prostitution in England and Wales.
More than nine out of 10 of street prostitutues are Class A drug users and many of them have been involved in the sex trade since childhood.
Ministers are also particularly concerned by the rise in international trafficking of women by organised crime.
In the four-month consultation, ministers are appealing to the public to help overhaul the law in key areas of prostitution.
Mr Blunkett said his priorities were:
- to prevent girls being coerced onto the streets
- to protect those already in the sex trade
- to bring to justice criminals controlling the lives of these women
While ministers say they are entirely open-minded on the way forward, the consultation details a number of possible changes in the law.
These include creating "managed tolerance zones", registering sex trade workers and licensing brothels.
But the Home Office also says none of these reforms has been shown to be foolproof in other countries - and in some cases have made the situation worse.
Mr Blunkett said: "The realities of prostitution - both for those involved and for the wider community - are often brutal. It involves the abuse of children and serious exploitation of adults.
"There are important tasks ahead of us and there are no easy answers or one single solution.
"Prevention is the key to alleviate the circumstances that make young people vulnerable to coercion into prostitution."
Some cities are already urging the government to permit trials of managed tolerance zones.
Liverpool City Council is expected to ask for permission to establish a controlled prostitution area - but ministers have stopped short of giving them the go-ahead.
"I am aware that some towns and cities are keen to introduce a managed area," said Mr Blunkett.
"However, there is an opposing view, equally forcefully expressed, that such areas are difficult to introduce and maintain and that they lead to degradation and squalor on the streets.
Communities 'must help'
"We have included this issue in the consultation because we need a thorough public debate and we need strong reassurance on the practical issues before contemplating a move in that direction.
"Government alone cannot address [these issues]. We need communities to help us."
The Home Office paper follows four months of internal government debate on methods used by other countries in dealing with the "difficult issue" of prostitution.
A group representing prostitutes across the UK told BBC News Online the laws should be completely abolished.
Home Office Minister Caroline Flint said they wanted to look at the prevention of prostitution and how to target pimps and traffickers.
She told BBC Radio 4's Today programme: "We're looking at projects to actually divert these women, engage with these women and help them out of it.
"I don't believe many of these women do prostitution out of choice if there was an alternative."
Cari Mitchell of the English Collective of Prostitutes, which provides support and advice for prostitutes across the UK, wants the industry decriminalised and made part of the community.
She told BBC News Online: "We oppose tolerance zones because they're really an excuse to avoid decriminalising, which is the only way to begin dealing with the stigma of the prostitution laws."
Increasing penalties for kerb-crawlers drives more women underground, she said.