Ministers have been warned that crime is set to rise for the first time in 12 years, according to a leaked Downing Street report.
The document, drawn up by the No 10 strategy unit, warned that a slowdown in economic growth was threatening to reverse recent falls in crime levels, The Sunday Times reported.
At the same time, the report was said to predict that the prison population could top 100,000 within the next five years - outstripping the planned rate of growth in prison places.
It suggested that the Government should consider other remedies, such as rationing the amount of alcohol people can buy and "chemical castration" for sex offenders.
According to the Sunday Times, the report said that 80% of the recent decrease in crime was due to economic factors, but that improvement was now in jeopardy.
"Unless action is taken, economic and social pressures are expected to put recent falls in crime under threat," it said.
Shadow home secretary David Davis said the report confirmed that there was a "massive shortage" in prison places.
"That will mean more short prison sentences, more early releases and more dangerous criminals on our streets - and as a result more crime caused by the Government's inaction," he told the newspaper.
"The Government's freezing of the Home Office budget is one more cause of an increase in crime and the report shows its sheer desperation with some of these measures that are being proposed."
A No 10 spokesman said: "This document does not represent Government policy. It sets out lots of ideas for discussion and consultation, including looking at measures used in other countries. The policy review process is still at an early stage and people should wait for the end of that process."
