The former prisons minister lashed out after it was announced that the early release scheme will be extended from 35 days to 70 days.
She said ministers must find emergency accommodation to house prisoners “at all costs”.
Ms Widdecombe said she used a prison ship and Norwegian oil rig cabins and even considered a holiday camp to house convicts when faced with a similar situation in her previous role.
“Simply sending a message that says 'our prisons are full' and therefore we are not holding people for the duration of their sentence, or we are not sending people there at all, is an incentive for crime,” she said. Talk radio.
Asked whether she would agree to extending the early release scheme, the Reform UK member said: “No, I don't. I was faced with exactly this situation when I was minister of prisons and I did not start releasing people or telling judges not to send them to prison.
“What we did was set up all kinds of emergency shelters – I brought a prison ship from the United States. Labor mocked it as the hulks, but they then kept it for nine years. We brought portacabins from Norwegian oil rigs, which we placed in lower security prisons for extra accommodation.
“At one point we even proposed taking over a holiday camp that just needed a secure perimeter around it.
“But it was a matter of finding emergency shelter at all costs and focusing on that.”
She added: “People want to be protected from crime and one of the ways you do that is by taking frequent or serious offenders off the streets.
“If the message goes out that the sentence imposed is not necessarily the sentence you will serve, then that is not an incentive.”
She said the last few months of a sentence are “important” for inmates who have been inside for several years.
'If the system works, at the end you should be preparing for your release. That would disappear and you would suddenly be on the street,' she warned.
The extension of the parole scheme will begin on May 23, according to an email to prison and probation staff obtained by The Times.
Chief Inspector of Prisons Charlie Taylor told Times Radio: “What we are seeing at the moment is an estate that is creaking at every level under enormous pressure from the sheer churn and number of people within the system.”
He said prisoners needed support “to be able to rehabilitate” but “if they simply languish in a cell, exposed to all kinds of drugs and further crime, then the danger is that they actually come out worse than they went in”.
That would result in “more crime victims, more violence, more communities in chaos.”
Mr Taylor said an additional 24,000 places are needed by 2028 “and that is simply not realistic in terms of construction”.
Justice Secretary Alex Chalk announced in October that the government would use its powers to allow the prison service to release some prisoners up to 18 days early to reduce overcrowding.
In March he extended the so-called supervised end-of-custody licensing system “to around 35 to 60 days” as Ministry of Justice statistics showed prisons in England and Wales were still approaching capacity.
The government emphasized that the measure would be temporary and only apply to “low-level offenders.”
The Ministry of Justice said offenders released early were under strict supervision.
An MoJ spokesperson said: “We will always ensure there is sufficient capacity to keep dangerous offenders behind bars.
“We are carrying out the largest prison expansion program in a century, opening 20,000 modern places and stepping up work to remove foreign offenders.
“To ease pressure on prisons in the short term, in March we announced an increase in the number of days that governors can, under existing powers, transfer some offenders to license at the end of their prison sentence.
“These offenders will continue to be supervised under strict conditions, such as tagging and a curfew.”