The prison population has hit an all-time high for the fifth week in a row, according to figures released on Friday.
Up to 22,000 new prison places are needed
The number of inmates now exceeds 74,000, said the Prison Service.
In the last four weeks, the population has risen by 633 inmates - the equivalent of a medium-sized jail - to 74,012.
The new figures will add fuel to an already heated debate over sentencing policy.
The operational capacity of the Prison Service officially stands at 76,436, but the number of inmates who can be detained is actually much lower.
'Tough on crime'
More people are jailed in England and Wales than in any other western European country - and more, per capita, than Libya, Malaysia and Burma.
Early this month, research by the Prison Reform Trust suggested it was longer custodial sentences, rather than rising crime rates, driving the rise in prison population.
It criticised the Home Office for encouraging judges to impose harsher sentences with rhetoric such as the slogan "Tough on crime, tough on the causes of crime", without providing the extra capacity harsher sentences require.
The Home Secretary David Blunkett has extended measures to speed up releases from jail.
Blunkett: faces a crisis in prison overcrowding
From next week, prisoners serving between 18 months and four years will be released 135 days early, rather than the existing 90 days.
It is the second time the Home Detention Curfew scheme - where offenders are released but must wear an electronic tag - has been extended in seven months.
And the spring Budget allowed Mr Blunkett funding to create an extra 1,000 places, bringing total capacity to about 78,700 by 2006.
However, the Home Office itself says between 8,000 and 22,000 extra places will be needed on top of that figure - leaving a gap ministers have yet to explain how to fill.