Former director general of the Prison Service, Martin Narey, has strongly criticised overcrowding in jails.
Mr Narey said many inmates should not be in prison at all
The prison population in England and Wales hit an all-time high of 80,000 at the end of last year.
Mr Narey said the current situation was "like putting people in a hospital, not giving them any treatment whatsoever and expecting them to get better".
He told Tory MPs and peers considering the National Offender Management Service Bill the approach was naive.
Mr Narey, who now heads children's charity Barnardo's, said "very modest" reductions in re-offending achieved during his time in charge had been wiped out by later rises in the jail population.
"We have some people in prison who don't stay as long as they should, but we have many who don't need to be there at all," he said.
Mr Narey told the committee of MPs and peers that in 1993 there were 29 shoplifters in jail at any one time. By 2003, that figure had risen to 1,500.
"I can't really believe that is a sensible use of a costly resource," he said.
The former prisons chief argued the senior judiciary, through the Sentencing Guidelines Council, should be able to have more influence on criminal justice policy to ensure prison places were used more effectively.
"We have to ration healthcare and education - we also have to ration prison places," he said.
Mr Narey became head of the Prison Service in 1998 and also headed the government's merged prison and probation service - the National Offender Management Service (NOMS).
The Sentencing Guidelines Council is an independent body which takes advice on a particular sentencing topic and uses this to formulate guidelines on the subject.