The figures are based on sentencing trend changes
The government has revised its highest projected prison population number for England and Wales in 2015 downwards from 101,900 to 95,800.
The estimate is based on changes in sentencing trends and early release programmes continuing.
But the Ministry of Justice said it is committed to jailing the most serious, dangerous and persistent offenders.
The Conservatives said the figures showed the government had mismanaged prisons, not that crime was falling.
The latest figures show prisons in England and Wales are holding 83,518 people at present.
The "operational" maximum capacity of prisons in England and Wales is currently 84,166 prisoners.
The "operational" capacity of prisons is the number of prisoners they can safely hold.
The figure can vary as some cells may not be in a suitable condition to hold prisoners.
Even the highest projected figure for 2015 suggests the rate of increase in the jail population, which rose by nearly 30% between 2000 and 2008, is slowing.
The median projection for 2015 is 89,700, while the bottom end number is 83,400.
Prisons Minister David Hanson said the government's prison building and renovation plans would see capacity rise to more than 96,000 by 2014.
"We will always ensure we have enough prison places for those offenders who need to be locked up," he said.
Overcrowding has seen more than 34,000 prisoners released early since summer 2007.
Among sentencing changes introduced this year is a reduction in open-ended jail terms.
The ministry predicts this will drop from about 140 serious or violent offenders a month being imprisoned for an indeterminate term to 45.
Also under the Criminal Justice and Immigration Act, prisoners who break the terms of their release from prison and are re-jailed will automatically be released after 28 days rather than completing their full sentence or gaining Parole Board permission.
Shadow justice minister Edward Garnier said the lowered estimates did not mean there was less crime, but showed that the government had mismanaged prisons.
The dramatic fall in the projected prison population pulls the rug from under the case to build 2,500-place Titan prisons
Prison Reform Trust
"To hide the truth, they have simply passed more laws to limit the ability of judges and magistrates to give custodial sentences, replaced the laws they passed to ensure more people went to prison for longer, and then released more and more prisoners early."
Liberal Democrat justice spokesman David Howarth called for the government to tackle the re-offending rate, as well as provide inmates with mental health and drug problems with more suitable accommodation.
The government announced plans for more prisons, including three "Titan" super jails in December, but the Prison Reform Trust said they were no longer needed.
Trust director Juliet Lyon said: "The dramatic fall in the projected prison population pulls the rug from under the case to build 2,500-place Titan prisons.
"Last year these same projections were cited by ministers as the reason why we need more and bigger prisons; today, they show that sentencing reforms make much of this colossal building programme redundant."
The Howard League for Penal Reform questioned the basis for the projections.
Its director Frances Crook, said the revised figures were "conveniently just below the number of spaces they will create through their Titan prison building programme".
But she said: "Given current sentencing trends, these revised figures are blindly optimistic.
"They are also dependent on the end of custody licence scheme continuing indefinitely, which doesn't appear tenable politically."