Once the front line against the Luftwaffe, now it's Howard's front line on crime

A former Royal Air Force base is to be converted into a make-shift jail and police cells that cost pounds 300 a night are expected to be used to house inmates under emergency plans to deal with the prison overcrowding crisis.

Richard Tilt, the director general of the Prison Service, admitted yesterday that the system was at bursting point. There are 58,090 prisoners in England and Wales, and there are expected to be more than 60,000 by next March.

The disclosure came as Sir David Ramsbotham, the Chief Prison Inspector, warned in his first annual report that over-crowding and lack of resources were the most severe problems facing the penal system.

The base at Finningley, near Doncaster in South Yorkshire, is due to house 300 low-risk category C prisoners from January, but the figure could rise to 900. The Prison Service has taken the site on an 18-month lease from the Ministry of Defence but Mr Tilt said it could be purchased outright. It is planned to build a security fence around the base, which until a year ago was used to train navigators and engineers. In the Second World World it was a bomber base.

Mr Tilt also admitted that police cells may have to be used to house inmates during the next few weeks. A committee of MPs has already condemned this practice pointing out that they cost more than a night at the Ritz hotel. In addition, in the next fortnight the first prefabricated overflow huts will be opened. Up to 720 offenders could eventually be accommodated in this way. "We are just about at the limit of our capacity and we are managing by moving prisoners around [the country]," Mr Tilt said.

About 10,000 prisoners now have to share cells as inmates increase by 1,000 a month in response to the clampdown on offenders by Michael Howard, the Home Secretary. Mr Tilt said overcrowding would be eased over the next 18 months by 7,000 places in new prisons and building in existing ones. He said the Government had allocated an extra pounds 85m to the problem.

Meanwhile in his annual report Sir David warned: "The most severe problems facing the Prison Service are shortage of money and the danger signs that overcrowding, and the associated evil of inactivity, are doing real damage to all the progress that has been made over the past four to five years."

The Prison Service pre-empted one of Sir David's recommendations by announcing yesterday the setting up of a new unit to look at the interests of woman and young offenders.

Sir David acknowledged that overall conditions and treatment of prisoners were notably better than they were during the Eighties. But he said it was important not to let inmates slump into idleness, expressing particular concern about cuts to work and education programmes - a fear recently expressed by two former home secretaries, Douglas Hurd and Kenneth Baker. He also described morale in the Prison Service as fragile.

Ann Widdecombe, Prisons minister, defended the Home Office policy, saying that the most severe problem was the number of people being sent to jail and the need to accommodate them on the day they were sentenced. "We have made money available twice in the last few months to address the problem," she told BBC Radio 4's The World at One.

Jack Straw, Shadow Home Secretary, said: "What the Chief Inspector of Prisons report illustrates is Michael Howard's failure on law and order - his failure to deal with the ever-rising tide of crime and his failure effectively to manage the Prison Service." Chris Scott, chairman of the Prison Governors' Association, added: "We should not allow this slow drift back to poor conditions."