Lord Falconer has announced that some prisoners serving terms of four years or less will be released up to 18 days early to ease prison overcrowding in England and Wales.
Lord Falconer told the Lords the length of jail terms had increased
The justice secretary's statement to the House of Lords came after the prison population broke the 81,000 barrier for the first time.
He said the measures were designed to ensure the government was able to accommodate all those the courts send to prison.
"We will respect and give effect to the orders made by the courts," he said.
Lord Falconer said the government had created more than 20,000 prison places since 1997, with a commitment to 8,000 more by 2012.
"We have increased expenditure on probation by 70% in real terms over the last 10 years," he added.
The justice secretary said an example of "our commitment to addressing the causes of crime" was that expenditure on drug treatment programmes in prisons had risen by £7.2 million since 1996/7 to £79 million in 2007/8.
The Treasury had made available new money to build an extra 1,500 prison places, he added.
"We will be starting work immediately on 500 of the extra places. The first of these additional places will come on stream in January 2008," he said.
Lord Falconer said more people were being sent to prison than ever before, which had led to the "record high" prison population.
The government had made public protection from the most dangerous criminals a priority, he told peers.
He said 25% more offenders were now brought to justice than when Labour came into office.
"Those who commit violent or sexual offences can now receive an indeterminate prison sentence," he said.
"The length of time criminals are sent to prison has increased, with the
average custodial sentence in Crown Courts rising by 25% between 1995 and 2005," Lord Falconer added.
"This means that, overall, there are 40% more serious and violent offenders in prison than in 1997," he said.