Predictions for the prison population suggest government building plans may not provide enough cells for inmates.
Most released prisoners reoffend
The Ministry of Justice figures suggest there will only be enough cells in the most optimistic of circumstances.
More than 80,000 people are in prison and the government has pledged 9,500 extra spaces to ease overcrowding.
Ministers have also published separate figures showing 3,832 prisoners have been let out of jail since June under a special early release scheme.
The current prison population is hovering at just below a record 81,000, with police cells being used for some inmates as an emergency measure.
A scheme to release some prisoners early on licence relieved pressure on jails in June - but the figures have been creeping back up again during the summer.
The fresh predictions prepared for the Ministry of Justice do not suggest the situation is going to improve but that on current trends ministers will be grappling with overcrowding problems for the foreseeable future.
Officials prepared three predictions for what could happen to the prison population based on current trends in sentencing and other factors.
In the worst case scenario, officials warn ministers that the England and Wales prison population could reach nearly 102,000 by 2014. The lowest figure is estimated at 88,000.
Ministers say that by 2012 there will be some 9,500 extra prison places - taking capacity up to about 91,000. But the figures show that even on the medium projection the government would be almost 5,000 spaces short by 2014.
The Ministry of Justice says the scenarios are not precise forecasts of what will happen to the prison population and are subject to considerable error margins. It says the three scenarios are considered "equally likely".
However, more detailed official figures show that the government's worst-case scenario population prediction for 2007 was passed earlier this year.
The prison population hit a record 81,000 in June, prompting ministers to sanction an early release on licence scheme.
Prisoners released by conviction
Figures do not cover all those released
The latest figures from the Ministry of Justice show that as of 31 July a total of 3,832 prisoners had been released under licence.
The majority of those released under the scheme were serving sentences of six months or less.
The figures show officials recalled 126 of the released prisoners to jail - but 43 remained on the run.
Of those recalled, 41 had committed crimes and 58 had failed to comply with reporting requirements. A spokesman for the Ministry of Justice said details of the offences committed were not available.
A sex offender initially released by error at the beginning of the scheme is back in jail, the spokesman added.
The scheme to release some prisoners early on licence only applies to inmates serving sentences of between four weeks and four years. Ministers say it excludes violent and sex offenders.