There were 1.59 million people formally dealt with by the criminal justice system in England and Wales between April 2018 and March 2019, the Ministry of Justice (MoJ) said, a drop of 2 per cent on the previous year.
The figures, which come from the National Police Computer, show the number of people taken to court for indictable offences - serious crimes dealt with by a crown court - dropped by 8 per cent, which is similar to the fall in the number of offences being charged by police.
While those figures were not broken down by area, the MoJ did provide data for Yorkshire that showed a dramatic fall in juvenile entrants to the criminal justice system. In 2009, 8,223 people under the age of 18 appeared in court in Yorkshire for the first time, compared with just 1,121 in the 12 months to March 2019, an 86 per cent drop.
Richard Atkins QC, chairman of Bar Council, said: "Criminals up and down the country will be rubbing their hands with glee knowing that even if their crimes are detected and they are caught by the police, the chances of them being prosecuted or jailed are slim."
Vice president of the Law Society of England and Wales David Greene said the figures came as "no surprise" because the criminal justice system is "at breaking point" and "simply doesn't have the resources to function effectively".
The Victims' Commissioner for England and Wales, Dame Vera Baird, said the figures were "disappointing" and seem to be part of a "wider and worrying trend".
She said it was the "state's first duty" to protect people and this was not happening, adding: "More victims are coming forward and report crime and yet the number of prosecutions is falling.
"It is so important victims have faith in our criminal justice system."
The figures were published days after Boris Johnson announced an "urgent review" of sentencing laws in a bid to see violent and sexual offenders locked up for longer.
The Prime Minister has also vowed to create 10,000 more prison places, hire 20,000 more police officers and give an extra £85m to the Crown Prosecution Service (CPS) to deal with its caseload.
The number of overall prosecutions and convictions fell, particularly for more serious crimes dealt with by crown courts. Custody rates also dropped.
Fewer out-of-court disposals were used, with a 22,300 (9 per cent) drop to 215,000, continuing a "steady decline" over the past 10 years.
Only the use of community resolutions increased, by 3 per cent to 105,600.
The number of crimes recorded by police rose by 8 per cent to 5.3 million excluding some fraud cases. The MoJ believes this is down to better recording of crime by police forces and victims being more willing to come forward.
The CPS said that over the last year fewer cases had been referred for charging decisions.
A spokesman added: "CPS prosecutors review every case referred to us by the police or other law enforcement agencies. If our test to bring a prosecution is met we will not hesitate to prosecute."
The proportion of career criminals being convicted rose.
Prison sentences are the longest in a decade, rising to an average of 17.2 months, the statistics said.
But the number of people on police bail fell by 16 per cent.
A Ministry of Justice spokesman said: "We are doing more to restore public confidence in the justice system, investing in police and prison places and reviewing sentencing to make sure violent and sexual offenders are properly punished."
Around two-thirds of prosecutions are brought to court by authorities other than police, such as councils or the Driver and Vehicle Licensing Agency.