Up to 4,000 inmates could be freed under the proposal, although the Government would begin with pilot schemes in selected areas before taking any decision to extend it nationally.
Three trial tagging schemes exist in Norfolk, Manchester and Reading, involving 461 offenders, where electronic surveillance is used to back court-imposed curfew orders.
The prospect of expanding use of the devices as a condition of early release of criminals in prison comes in the week when the jail population hits 62,000.
Labour was always lukewarm about tagging when in opposition. But with numbers rising by 250 a week, unless urgent measures are taken, a new 1,000-capacity jail would be required each month, costing pounds 90m to build and pounds 20m a year to run.
Harry Fletcher, assistant general secretary of the National Association of Probation Officers, said: "The point will be reached soon where the Home Office can no longer build prisons as a solution to the problem."
Tagging as a community penalty had proved expensive and did not help with rehabilitation, he said. "The easiest solution ... would be to advise the courts to make greater use of community sentences."
Nearly a decade ago, a prison overcrowding crisis prompted the then home secretary, Douglas Hurd, to free 2,500 non-violent prisoners before their due release dates. Early release coupled with electronic monitoring would provide Jack Straw, the Home Secretary, with a way through the current predicament without appearing too "soft" on criminals.
The original tagging technology was fraught with difficulties but the teething problems have been ironed out. A new "super-tag" now exists, the size of a large watch but weighing just 21 grams, which the offender wears round the ankle or wrist.
Charles Rose, chief executive of Geografix, which runs the Norfolk pilot, said: "It has worked extremely well." Of the 119 offenders tagged under the Norfolk scheme, only eight had had to be returned to court for re- sentencing, he said.
Paul Cavadino, principal officer of the National Association for the Care and Resettlement of Offenders, said: "This would be a more sensible use of electronic tagging than those tried so far. However, post-release supervision by probation officers and other conditions of release are more likely than tagging to reduce reoffending. They would also be a more realistic option for the many prisoners without family homes or other stable accommodation."
Tagging would still work out more expensive than probation or parole - almost pounds 4,000 per offender per full year, compared with pounds 2,500 for supervision by a probation officer. But it compares favourably with the pounds 24,000 it costs to keep a person in prison for a year.
Mary Honeyball, general secretary of the Association of Chief Officers of Probation, said: "Tagging has always made more sense as a monitoring system for more serious offenders than as a punishment or deterrent for low-level offenders. But she added: "This could be a good way of reducing the pressure on the prison system."Reuse content