Overcrowding in Midland prisons could cost taxpayers millions of pounds, official watchdogs have warned.
The National Audit Office highlighted Birmingham Prison and Blakenhurst Prison, in Redditch, Worcestershire, in a hard-hitting report published today.
Both were among the ten most overcrowded prisons in England and Wales, the report said.
If the crisis cannot be resolved soon, prisoners will have to be kept in police cells - which costs £362 a night, five times as much as keeping them in prison.
Overcrowding was also damaging efforts to turn offenders away from a life of crime, the National Audit Office said.
Charles Clarke, the Home Secretary, admitted Britain's jail population was "very close" to bursting point, earlier this week.
Today's report reveals that almost 500 prisoners are sharing cells at Birmingham Prison, and almost 450 are sharing at Blakenhurst.
Birmingham was forced to transfer 222 prisoners to less crowded jails, such is Liverpool prison, over six months.
And Blakenhurst had to transfer 407 prisoners to other jails in the same period.
The report also reveals that almost half of Birmingham's 1,400 prisoners are not working or being educated.
It follows an earlier report which named Shrewsbury Prison as one of the most overcrowded in the country. It has room for 168 inmates, but at one stage almost 300 were crammed in.
Sir John Bourn, the auditor general, said: "The large prison population has led to increased levels of overcrowding, stretched resources and, at times, an urgent need to increase capacity."
He added: "Overcrowding can seriously disrupt prisoners' education and rehabilitation programmes."
In 2002, the Prison Service began investing millions in "quick-to-build" jail blocks, including 1,160 beds in modular temporary units and a further 920 in brick-clad, steel-framed houseblocks, the report said.
But the building programme was plagued with problems and went £7 million over budget, the report said.
The units were only suitable for low-risk prisoners, and inmates could not be locked in their cells at night in case of fire.
Sir John said: "Better contingency planning would help to ensure that future responses to increases in prisoner population were more cost-effective."