The Lord Chief Justice has urged more use of community sentences, as the jail population nears capacity.
Lord Phillips helped clean up a council estate (Picture: Thames Valley Probation Area)
England and Wales' senior judge said overcrowding made it impossible to ensure inmates could be rehabilitated.
Lord Phillips of Worth Maltravers spoke to the Observer after going undercover on a community punishment scheme.
Meanwhile, a memo reportedly shows the home secretary is willing to "risk" a rise in open prison escapes if measures to address overcrowding are brought in.
According to the Sunday Times, John Reid has met members of the National Offender Management Service and Immigration and Nationality Directorate to discuss moves such as early releases and using about 500 police cells.
Prisoners convicted of non-sexual and non-violent crimes could be moved from secure to open jails to make space.
The prison population has hit a record high of 79,843, and in theory just 125 more spaces are available.
Lord Phillips said using police cells as replacements would be "highly undesirable".
He had posed as a drink-driver to serve part of a community order cleaning up a council estate in Bletchley, Buckinghamshire, the Observer reported.
Lord Phillips said: "The ideal that alternatives to custody is being soft is wrong."
The public must be educated to distinguish between the "brutal, dangerous offender and the inadequate who offends to get money for drugs".
Asked if prisons were now simply "social dustbins", Lord Phillips said: "I think they are to some extent".
He also said it was "madness" to spend £37,000 jailing someone "when, by spending much less on services in the community, you can do as good a job".
But Attorney General Lord Goldsmith said all prisoners were risk-assessed and that only "a very small proportion of the overall prison population" should not be in custody.
Violent and sexual criminals would still receive tough sentences, he added.
Fiona Radford, governor of Ford open prison in West Sussex, warned in August that if more inmates were transferred from secure prisons, there was a risk of more absconds and drug use, the Sunday Times reports.
She reportedly said in a memo to staff that she had informed Prison Service director general Phil Wheatley.
"Ministers have apparently been briefed to this effect and are taking this risk... Increase(d) number of absconds and increased number of drug positives accepted as inevitable by JR", the Sunday Times quotes the memo as saying.
JR was thought to refer to Mr Reid, it said.
In a statement, Mr Wheatley said: "The home secretary has made it absolutely clear that no prisoner who represents a significant risk to the public will be moved to the open estate."
'Carousel of crime'
Norman Brennan, director of the Victims of Crime Trust, said the government had an "obsession with keeping dangerous and persistent criminals out of prison".
It had been "a licence to cause mayhem and allowed too many criminals to think they are untouchable", he added.
Shadow Home Secretary David Davis said more focus on drug rehabilitation and work training was needed in prisons.
Inmate risk-assessment was not perfect and had not prevented a "carousel of crime", he added.
Liberal Democrat home affairs spokesman Nick Clegg warned that open prisons must not become "dumping grounds" for dangerous criminals.