The government has published a major review of prison overcrowding in England and Wales by Labour peer Lord Carter of Coles.
A prison ship is one option to increase prison place numbers
It outlines a number of recommendations, many of which Justice Secretary Jack Straw told the Commons he would be acting upon.
Among them is a long-term £1.2bn building and modernisation programme.
This includes creating three "super-prisons" by 2014 - each with a 2,500 capacity - to replace older, smaller jails.
The report also looked at short and medium-term ways to increase capacity.
Jack Straw suggested converting a former Ministry of Defence site at Coltishall in Norfolk into a Category C prison and the open prison, HMP Wealstun near Leeds, into a closed prison.
He also said a prison ship was a possibility.
One ship belonging to the Dutch government and another owned by a private contractor are being considered by the Ministry of Justice.
More use of bail
Lord Carter's report also considered measures to reduce the use of imprisonment.
One suggestion was to restrict the use of indeterminate sentences to the most serious offenders.
Mr Straw said there would be an amendment to the Criminal Justice and Immigration Bill to introduce a minimum tariff of two years, below which indeterminate sentences could not be given.
He also said a recommendation for less use of remand and more use of bail for offenders awaiting trial was under consideration.
The creation of a new Sentencing Commission was another key proposal in the report.
The commission would set up a series of indicators for judges on sentences, based on the current prison population.
Mr Straw said he was personally in favour of the idea, but a working group would look at the proposal, which could prove controversial.
However, shadow justice secretary Nick Herbert told MPs: "On this side we believe sentences should fit the crime, not jail capacity."