Prison service statistics show that by the end of 1998, there were 4,011 "lifers" in jails in England and Wales.
The Prison Reform Trust says this 40% rise on the average of the previous decade is far too high.
Most are serving mandatory life sentences for murder and the trust is calling for these to be abolished in favour of giving judges discretionary power, as is the case elsewhere in Europe.
The trust says that the UK is following the experience of the US, with growing numbers of "pensioner" prisoners.
Each year, between 80 and 90 inmates are released from life sentences, but 300 more enter the system.
Flexible system
Prison Reform Trust director Stephen Shaw said: "The number of people serving life has now reached an unprecedented high.
"It is time we followed the example of other European countries and abolished the mandatory life sentence for murder, reserving it as the maximum sentence available to the court."
But Home Office Minister George Howarth rejected the call.
He told BBC Radio 4's Today programme that the tariff system - under which all those sentenced to life are told how long they can actually expect to serve - allowed the system to deal fairly with different criminals.
"The mandatory life system has flexibility built in," said Mr Howarth. "We can deal with less serious offences, for example, so-called mercy killings, through to the most serious offences of terrorists."
He said the actual tariff can reflect the seriousness of the offence so for terrorists life can mean life.
Budget cuts
The rise in lifer numbers is likely to be exacerbated by the 1997 introduction of life sentences for people convicted of a second serious violent or sexual offence - although these sentences are discretionary and not mandatory.
Further pressure is placed upon the system by the fact that the average lifer in England and Wales stays in jail for 14.3 years, compared with 11.2 years in 1987.
The trust's report warns that although prisoners are spending longer in jail, previously successful schemes preparing them for release have suffered from budget cuts and staff shortages.
Northern Ireland
Scotland
Wales
England
Straw aims to cut re-offending
(11 Nov 98 | UK)
MPs demand cut in prison sentences
(10 Sep 98 | UK Politics)
Police watchdog attacks care of prisoners
(11 May 98 | UK)
Explosion in prison population predicted
(29 Jan 98 | UK)
The Prison Service
Home Office
British Society of Criminology
Prisons Handbook
The BBC is not responsible for the content of external internet sites.
Next steps for peace
Blairs' surprise over baby
Bowled over by Lord's
Beef row 'compromise' under fire
Hamilton 'would sell mother'
Industry misses new trains target
Quins fightback shocks Cardiff
(From Sport)
Vodafone takeover battle heats up
(From Business)
IRA ceasefire challenge rejected
Thousands celebrate Asian culture
Christie could get two-year ban
(From Sport)
Colleagues remember Compo
(From Entertainment)
Mother pleads for baby's return
Toys withdrawn in E.coli health scare
Nurses role set to expand
(From Health)
Israeli PM's plane in accident
More lottery cash for grassroots
Pro-lifers plan shock launch
Double killer gets life
Cold 'cure' comes one step closer
(From Health)
Straw on trial over jury reform
(From UK Politics)
Tatchell calls for rights probe into Mugabe
Ex-spy stays out in the cold
Blair warns Livingstone
(From UK Politics)
Smear equipment `misses cancers'
(From Health)
Boyzone star gets in Christmas spirit
(From Entertainment)
Fake bubbly warning
Murder jury hears dead girl's diary
Germ warfare fiasco revealed
(From UK Politics)
Blair babe triggers tabloid frenzy
Tourists shot by mistake
A new look for News Online