John Reid is being warned the prison system faces its worst crisis for a decade as he prepares to announce emergency measures to combat overcrowding.
The Home Secretary is expected to approve the use of police cells to house newly sentenced offenders and the removal of some foreigners from jail - either by deporting them or transferring them to immigration detention centres.
He will also take the politically hazardous step of allowing some lower-risk inmates to be switched to open prisons, where there is still some space.
Over the weekend the prison service opened another 85 prison places, but at current rates they will be filled within three days.
The jail population in England and Wales is 79,843, just 210 below official capacity.
Mr Reid is due to set out his plans for easing the pressure on the prison estate this week, possibly as early as today. He has already ruled out the early release of prisoners, although some Government colleagues believe it could become inevitable.
He is also attempting to clinch reciprocal agreements with several governments, under which they will accept back their citizens now in British jails.
A leaked prison service memo yesterday suggested that Mr Reid "accepted as inevitable" that there would be an "increase in absconds" as a result of offenders being transferred to open prisons. It said: "Ministers have apparently been briefed to this effect and are taking this risk."
The disclosure embarrassed ministers who are sensitive to the charge of being soft on criminals.
Lord Goldsmith, the Attorney General, told Sky yesterday: "I'm sure there is no question of putting people in open prisons who are dangerous offenders. People will not be moved to open prisons without a proper risk assessment."
Gerry Sutcliffe, a Home Office Minister, said: "John Reid and I certainly wouldn't want to put the public at risk. Any re-categorisation has got to be risk-assessed and people have got to have not committed violent crimes or sexual crimes."
The country's most senior judge called for more resources for non-custodial sentences to divert offenders from prison. Lord Phillips of Worth Matravers, the Lord Chief Justice, made his call after spending a day incognito on a community sentence.
He warned that the prison system was so overcrowded that it was "difficult or impossible" to rehabilitate offenders, describing jails as little more than "social dustbins".
Richard Garside, acting director of the Centre for Crime and Justice Studies, King's College London, said: "This is possibly the biggest crisis to hit the prison system since Labour came to power. The government's own projections on prison numbers suggest it is going to get a good deal worse in the next few years. The government has boxed itself in, pursuing 'tough-on-crime' policies without any clear thinking on how to deal with the consequences."
Frances Crook, director of the Howard League for Penal Reform, said: "John Reid is presiding over a prison system in meltdown."
David Davis, the shadow Home Secretary, told BBC Five Live the crisis was the result of Government failure to invest in prisons sooner.