(CNN) -- Attorney General Eric Holder on Monday announced new regulations for the more than 200 halfway houses operated by federal contractors, requiring them to provide transportation and allow inmates to use cell phones to reconnect with family and friends, and to start looking for jobs.
The new regulations also require the half way houses to provide mental and substance abuse treatment to inmates, and are part of Holder's "Smart on Crime" initiative, under which prosecutors are seeking ways to reduce sentences for certain non-violent drug offenders.
The Justice Department said Holder's moves can be at least partly credited for the biggest drop in the federal prison population, a reduction of 4,000 inmates compared to the end of last fiscal year in September.
Federal prisons incarcerate 216,000 people in the United States, which accounts for only 5% of the world's population but holds 25% of its prisoners.
While states have made moves to cut prison populations, partly due to budget reasons, changes in the federal prison population has lagged for some time.
The new Justice Department regulations affect contractors that run halfway houses for the United States Bureau of Prisons, which uses such facilities to hold inmates near the end of their sentences as they prepare to transition to life outside prison.
Holder said the changes "will enhance the programs that help prisoners overcome their past struggles, get on the right path, and stay out of our criminal justice system."