Budget hotels could be used to house newly freed prisoners as the government lets offenders out early to ease pressure on the justice system.
The government started its operation to end custodial sentences for some prisoners after 40% time served rather than 50% today, with around 1,700 people expected to be let out.
Justice Secretary Shabana Mahmood was at the same time answering questions about her department in the House of Commons.
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The Labour MP for Wrexham, Andrew Ranger, asked the secretary of state what her approached would be to deal with people let out of prisons who have nowhere to live.
Ms Mahmood said: "We're working closely with [Ministry of Housing, Communities and Local Government] colleagues to understand the impact on the housing sector.
"But as with any time a prisoner is released, probation staff are working hard to prepare release plans, including permanent and temporary accommodation.
"If an offender is at risk of homelessness upon release, they will be housed in community accommodation, and we expect to provide housing for the majority of offenders using existing provision.
"But should there not be enough provision, I have authorised probation directors to make use of alternative arrangements, including budget hotels, as a temporary measure for the cases that we will see in the next few weeks."
The Ministry of Justice (MoJ) is keen to distance this policy from the Home Office's housing of migrants in hotels, which costs the taxpayer millions of pounds a day.
Instead, this policy is intended to be used as a last resort if local authorities cannot find accommodation for released prisoners - and may not be needed. If it is not used, the policy will not incur costs.
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As it is a part of the release programme, no one who would be housed in a hotel would be serving a sentence for violent, sexual, terrorism or domestic abuse offences.
The 1,700 people being released will come on top of the regular 1,000 people that leave prison in the England and Wales every week.
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A MoJ spokesperson said: "The new government inherited a justice system in crisis and prisons on the brink of collapse. If we had not acted, there was a real risk to public safety with courts forced to stop locking up dangerous criminals and police unable to make arrests.
"It is important for offenders to have a roof over their head when they leave prison, otherwise there is a high risk they will reoffend and end up back behind bars.
"That is why the Prison and Probation Service has basic housing for offenders who would otherwise be forced to sleep on the streets with additional ad hoc arrangements only to be used as an absolute last resort."
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