John Reid has been warned that the safety of the public and prison officers is being put at risk by record levels of jail overcrowding.
The prison population hit a grim landmark yesterday as the number of people behind bars in England and Wales reached 80,000 for the first time.
The prison population has been rising remorselessly as courts jail more people for relatively minor offences, while longer sentences are being handed out for more serious crimes. It stood yesterday at 80,060, with 79,908 inmates in jail and another 152 being held in police stations under emergency plans ordered last month by the Home Secretary.
There are just 249 spare spaces in jails anywhere, with prison chiefs being forced to bus newly sentenced offenders around the country. The problem is particularly acute in London, the South-east and the North-west.
The record high was announced as Mr Reid held talks in the Home Office with criminologists and penal campaigners on how to get a grip on the situation.
The Home Secretary faced criticism over the direction of penal policy in the meeting, being warned that the atmosphere in some jails was so tense that the safety of prison officers was being jeopardised.
He was told that the amount of rehabilitation work with inmates was suffering because of overcrowding, with the result that they were more likely to reoffend upon release. Ministers also faced pleas to rebuild the credibility of community sentences, both in the eyes of the public and courts, and to investigate other ways of treating mentally ill offenders.
An extra 2,600 people have been locked up over the past year, and the prison population - the highest in western Europe - is almost 20,000 higher than when Labour came to power.
The Home Office, which has announced a programme to open 8,000 extra prison places by 2012, said: "The National Offender Management Service closely monitors the prison population, which fluctuates on a daily basis, and continues to investigate options for providing further increases in capacity."
Edward Garnier, the Conservative home affairs spokesman, accused the Government of "reckless management" of the prison system. He said: "It has patently failed to address the alarming lack of capacity in our prisons despite warnings from the Conservatives and others."
Nick Clegg, the Liberal Democrat home affairs spokesman, said: "The overcrowding crisis in our prisons is like watching a train crash in slow motion. We have been warning the Government for years that its policy of mass incarceration is wholly unsustainable."
Geoff Dobson, deputy director of the Prison Reform Trust, said the population had "accelerated through the 80,000 barrier, not as a result of any strategy or planning, but because criminal justice policy has become a party political auction at the taxpayer's expense."
Ministers are casting around for alternative emergency accommodation for offenders after they abandoned plans to convert a former army barracks near Dover into prison spaces.
They have ruled out releasing any inmates early, but could be forced to let out hundreds of foreign national prisoners who have completed their sentences but are awaiting deportation in jail.
Extra places could be bought in police cells, although that option is hugely expensive for the Home Office.