HMP Weare was the last UK prison ship to be decommissioned
David Cameron has said his party could bring back prison ships if it wins power after the next election.
The Conservative leader said the move was being considered as a "cost-effective" way of ending Labour's early release scheme for prisoners.
The scheme allows non-violent offenders in England and Wales to be freed up to 18 days early to ease overcrowding.
The UK's last floating jail, HMP Weare, was sold in 2005 after eight years holding prisoners off Portland, Dorset.
Although the policy has not been included in the Conservatives' draft crime manifesto, Mr Cameron said it was being actively considered.
The Tories have long called for an end to early release, saying 75,000 offenders have not served their intended prison sentence as a result.
At his monthly press conference, Mr Cameron said the scheme undermined confidence in the criminal justice system and sent a "dreadful signal" to criminals and the public.
"I think it is really important that we end early release," he said. "Prison ships are a very good way of making sure we can end it in a timely and cost-effective manner."
Before it was sold off, HMP Weare was criticised as being unfit for purpose, and for restricting prisoners' access to fresh air and exercise.
Ministry of Justice figures released last year showed more than 50,000 criminals had been released from prison under the End of Custody Licence scheme since it was introduced in 2007.
Ministers say the early release scheme is a carefully considered way of reducing overcrowding but stress it will end when there is extra capacity in the prison system.
Those convicted of serious violent offences are excluded from the scheme but opposition parties claim the scheme fuels crime.