Wales' five jails were so full on two days in the last week that there were no spare places, say prison managers.
New prisoners have been sent to jails in England because of a lack of room.
The scale of the problem emerged as a report on Swansea Prison was published that found some inmates spent 22 hours a day in cells due to overcrowding.
Prison inspectors also said support for inmates at risk of suicide was weak but there was excellent drug treatment work and a healthy environment.
A team from Her Majesty's Inspector of Prisons said in their findings released on Thursday that many of the issues facing Swansea prison were due to overcrowding.
Prison managers said that similar issues faced Wales' other prisons at Cardiff, Prescoed, Usk and Parc, in Bridgend.
Swansea's city centre prison currently houses 425 inmates - the absolute maximum - in accommodation designed for 248.
The report said that in Swansea, accommodation was clean, race relations were good, and there was a positive relationship between staff and inmates.
But it also expressed concern about the care of vulnerable prisoners and said support plans for those at risk of suicide were weak.
There have been three deaths in the prison since the start of 2004 - two suicides and one from natural causes, although prison managers said that was relatively low compared with other jails.
The inspectors said there were few opportunities to gain employment skills and at any one time of the day, around half the prisoners were locked in their cells.
On the eve of the report's publication, the BBC news website was invited to the prison.
Governor Phil Taylor said work was already being done to address many of the inspectors concerns.
INMATES IN WELSH PRISONS
Parc, Bridgend: N/A
"The fact that we got such positive aspects in the report with such high numbers (of inmates) is a compliment to the establishment but we do not under estimate the value of the report," he said.
"We are constantly looking at ways we can support vulnerable prisoners so that we can avoid them feeling so desperate they want to take their own lives and I think we do pretty well.
"It (the report) recognises quite clearly that Swansea is a decent prison."
Inmate Scott Colombe, who had been at Swansea for more than 12 months, told BBC Wales that although he had a single cell now, when he first arrived he had to share with another prisoner.
He said: "There's not really much privacy, especially when you have to go to the toilet with someone else looking on."
But he said morale amongst prisoners was good and the staff treated them well.
"It's ok, I don't find it that bad but if I had a family I think it would be a lot worse for me," he said.
John May, operations manager for prisons in Wales, said the situation in Swansea was on a par with the others with "unprecedented high levels" of inmates.
"The reality is all the prisons in Wales are at a very similar place," he said.
"There is good work in some fairly uninspiring surroundings but finding enough accommodation is a huge problem for us.
"During this week we had two days when all the prisons in Wales did not have any spare beds.
"We are not pretending overcrowding is a good idea from anyone's point of view, especially the prisoner. I don't expect it to change any time soon."