Prisoners who have served 40% of their sentence will be released to help alleviate overcrowding, the government has announced.
Justice Secretary Shabana Mahmood said failing to act now risks "the collapse of the criminal justice system and a total breakdown of law and order", including looting and rioting in the streets.
The newly appointed minister blamed Rishi Sunak "and his gang in Number 10" for being "too weak to heed the warning signs that were flashing".
More than 10,000 prisoners were released early under the previous government between October last year and June this year, the new government has said.
Prisoners in England and Wales, apart from the most serious offenders, are usually released on licence after serving 50% of their sentence.
From September, this will be reduced to 40%.
Prison Officers Association chair Mark Fairhurst told Sky News this could mean about 5,500 prisoners are released under the scheme in the first few months.
The reduction in time served will not apply to those who committed serious violent offences with sentences of four years or more.
This includes:
• Stalking offences
• Controlling or coercive behaviours in an intimate or family relationship
• Non-fatal strangulation and suffocation
• Breach of restraining order, non-molestation order and domestic abuse protection order.
The most serious offenders will also not be released early. They must currently spend two-thirds of their sentence behind bars or have the Parole Board decide if they can be released.
Electronic tagging and curfews
Prisoners released early under the programme will be strictly monitored through measures including electronic tagging and curfews.
They could be recalled to prison if they breach their licence conditions.
Lord Chancellor Mahmood, announcing the plan at HMP Five Wells in Northamptonshire, said: "When prisons are full, violence rises - putting prison officers on the front line at risk.
"When no cells are available, suspects cannot be held in custody. This means van loads of dangerous people circling the country, with nowhere to go.
"The police would have to use their cells as a prison overflow, keeping officers off the streets.
"Soon, the courts would grind to a halt, unable to hold trials.
"With officers unable to act, criminals could do whatever they want, without consequence.
"We could see looters running amok, smashing in windows, robbing shops and setting neighbourhoods alight.
"In short, if we fail to act now, we face the collapse of the criminal justice system. And a total breakdown of law and order."
This is an emergency measure and questions remain about meaningful reform
By Mollie Malone, news correspondent
This will be seen among the prison and probation sector as a proper attempt to reset and alleviate the immediate prisons crisis.
New legislation potentially by September to let certain offenders out to help free up space.
But it doesn’t solve everything. Far from it.
The justice secretary admits today that the core announcement to lower the automatic release point from 50% to 40% is in itself an emergency measure.
At the moment, we are lurching from one emergency measure to the next.
There are safeguards in place that didn't exist under the controversial ECSL scheme launched by the Conservative government in October - allowing eligible offenders to be released up to 70 days before the end of their sentence.
Those safeguards might help offset some fears expressed by victim groups. But it certainly doesn't offer a long term solution.
"Although it will be a law it still does not resolve how we use prison in the long term," said one prison source.
"If we carry on with court back logs and send more people to prison we will be in the same position all over again."
The government is committing to building more prison places. But prisons minister James Timpson fundamentally disagrees with that approach and thinks a third of people in prison shouldn't be there
There are lots of questions yet to answer about what meaningful reform looks like.
The previous Conservative government started a controversial early release prisoner scheme last October which allowed certain offenders to be freed up to 70 days before the end of their sentence.
Ms Mahmood said that scheme, which saw more than 10,000 offenders being released, is now being stopped.
Speaking on the previous Conservative government, the justice secretary said: "Time and again, they ducked the difficult decisions that could have addressed this challenge. Instead, they kept the public in the dark about the state they had left this country in.
"They were too weak to heed the warning signs that were flashing. They chose instead to put the country at risk."
She added: " Those responsible - Sunak and his gang in Number 10 - should go down in history as the guilty men.
"The guilty men who put their political careers ahead of the safety and security of our country. It was the most disgraceful dereliction of duty I have ever known."
Read more:
Prisoners likely to be released earlier
Early release prisoner describes chaos
Labour promises thousands of new prison spaces
Since the beginning of 2023, male prisons in England and Wales have had an occupancy rate of more than 99% the majority of the time, Ministry of Justice figures show.
The latest figures revealed there were only 708 places remaining on Monday.
For the system to operate smoothly and effectively, a minimum buffer of more than double that - 1,425 spaces - is required.
Ms Mahmood also promised to recruit more than 1,000 additional trainee probation officers by March 2025 and to publish a 10-year prison-capacity strategy at the autumn Budget.
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