The number of prisoners released early on electronic tags has fallen to its lowest level for four years, despite a shortage of places in jails.
The number of tagged prisoners is at a four-year low
Prison governors say they are reluctant to use the tagging scheme because of repercussions if prisoners re-offend.
The number of prisoners tagged at any one time has fallen by a thousand in two years, and is down by 500 in the past six months.
The Home Office said possibly fewer inmates were eligible for tagging.
This is in spite of the fact the jail population is at record levels.
The Home Detention Curfew scheme aims to relieve overcrowding by freeing non-violent prisoners up to four-and-a-half months before the end of their release date.
Ministers are planning to provide 8,000 new prison cells to ease overcrowding, but many of them are unlikely to be ready for at least five years.
The Home Office is expected to confirm on Thursday that more prisons will be built to cope with the increasing numbers of inmates.