Tony Blair has defended a move to ask judges to jail only the most dangerous and persistent criminals.
Police cells have been used to ease overcrowding
The prime minister told the Commons that Home Secretary John Reid was simply reminding the courts of existing sentencing policy in England and Wales.
The PM added that there would be 2,000 extra prison places by the end of the year, and 8,000 more on top of that.
The Tories called the latest decision "outrageous", and the Liberal Democrats accused ministers of "incompetence".
Mr Reid, the attorney general and lord chancellor sent out the advice to judges and magistrates as the number of inmates in England and Wales hovered about the maximum 80,000 mark.
Speaking during Prime Minister's Questions, Tony Blair said that other options such as prison ships and army camps could be considered.
Opposition leader David Cameron said in the Commons: "The latest crisis in the Home Office is that the home secretary is writing to courts up and down the country pleading with them not to send convicted criminals to prison."
Mr Blair responded: "I must correct you on what the home secretary has said.
"He is simply reminding the courts of existing sentencing policy set out in the legislation."
He added: "Not merely are there going to be 2,000 extra prison places in this country by the end of this year, but as a result of the investment in prison places, there will be a further 8,000 on top of that."
The government will have 350 extra places in a prison on Merseyside in the spring, but its 8,000 new places will not all be ready for four years, with funding and sites yet to be fully approved.
Former Chief Inspector of Prisons Lord Ramsbotham told BBC News that the government had only itself to blame for the prisons crisis.
"The government have created the conditions which they're now having to reap by their horrendous flood of new legislation, new laws, directions to judges, longer sentencing, mandatory sentencing and so on," he said.
Earlier, pressure groups and opposition politicians condemned the government's criminal justice policies.
Shadow home secretary David Davis said it was "outrageous" that court sentences were being dictated by the prison capacity and not the offence committed.
The Lib Dems' Nick Clegg said the government's "arrogance and incompetence" had led to the crisis.
Juliet Lyon, of the Prison Reform Trust, accused ministers of "criminal negligence" for allowing the jail population to spiral so dramatically.
The Prison Officers Association called for more funding to avoid the same thing happening next year.
Operation Safeguard, when police cells are used to house prisoners in England and Wales, began again this month.