MSPs have voted narrowly in favour of extending the time prisoners can spend on home detention curfews (HDC).
There are more than 300 prisoners on home detention curfew
The extended tagging scheme will allow short-term prisoners to be released under electronic tagging orders six weeks earlier than at present.
Justice Secretary Kenny MacAskill said this could free up 50 prison places.
Plans to extend HDC to long-term prisoners granted parole were defeated because several Liberal Democrat MSPs voted the wrong way.
The changes covering short-term prisoners allow inmates to be released under electronic tagging orders for the last six months of their sentence rather than the final four and half months.
Mr MacAskill told MSPs that the prison population stood at 8,067 but prisons were designed to hold 6,626.
The justice secretary said the system was now under "intolerable strain" and that the measure would partially help ease this.
The tagging extension went through after the SNP government secured the support of the Liberal Democrats, Greens and independent MSP Margo MacDonald.
Last week MSPs on the justice committee narrowly rejected the plans but the full parliament voted by five votes in favour.
Labour and the Conservatives voted against.
Labour's justice spokesperson Pauline McNeill accused Mr MacAskill of "playing politics" with the committees of parliament.
She said: "Failure to work with the members of the justice committee who had real concerns about this does not bode well for the future."
Conservative justice spokesman Bill Aitkin said he was "outraged" by the decision.
Mr Aitkin said: "The SNP is totally out of touch with public opinion in Scotland.
"This refusal to face up to the simple truth that Scotland needs more prisons is a disgrace."
The justice committee had wanted a "sunset clause" in which the curfew extension would automatically expire when the new prison at Addiewell in West Lothian comes on stream.
That was rejected by the justice secretary but the policy will be reviewed at that time.