The prisons watchdog on Wednesday called for a public inquiry into penal policy in England and Wales, saying the government's criminal justice strategy was incoherent.

Chief Inspector of Prisons Anne Owers said she wanted to see an investigation like the 1990 Woolf inquiry into jail riots, which led to the creation of the Prisons Ombudsman.

"What is surely needed is a Royal Commission, or a major public inquiry ... which can allow wider discussion and draw on a range of experts to help develop a blueprint for a sustainable, coherent and effective penal policy for the future."

Writing in her annual report, Owers said last year's overcrowding crisis in prisons was both predicted and predictable.

"(It was) fuelled by legislation and policies which ignored consequences, cost or effectiveness, together with an absence of coherent strategic direction," she said.

"The irresistible force of rising prisoner numbers met the immovable object of limited prison places."

During November prisoner numbers rose to over 81,500, barely a hundred less than total capacity, with many held in police cells.

She said the overcrowding had contributed to a 40 percent rise in self-inflicted deaths to 88 during the 12 months to August 2007 covered by her report.

A government-commissioned report by Lord Carter in December said that at best prison numbers could be capped at 96,000 by 2014 -- a near doubling over 20 years.

"Emergency proposals to increase capacity may see the return of the prison ship, and rapid conversions of unsuitable army camps, as well as no end to overcrowding and the continued use of police cells," said Owers.

"On the horizon loom the Titans -- 2,500-strong prison complexes, flying in the face of our, and others', evidence that smaller prisons work better than large ones."

She said despite the problems prisons remained better places than they were 10 or 15 years ago.

But she warned that demands for efficiency savings over the next three years could see standards fall.

"Our prison system is at a crossroads. There are recent signs of a more effective and measured approach to policy and strategy, some new initiatives and plenty of good operational practice to build on," she said.

"But, on the other hand, there is a real risk that we will move towards large-scale penal containment, spending more to accomplish less, losing hard-won gains and stifling innovation."

Liberal Democrat Leader Nick Clegg said the report showed prisons were on the brink of disaster.

Conservative Justice Spokesman Nick Herbert said the report should shame ministers.

Prisons Minister David Hanson said the Ministry of Justice had set out a clear strategy for the prison service.

"We know there is more to do and we will of course examine the chief inspector's report with great care. Our first priority, as always, is to protect the public."