The prison population has ballooned in recent decades as a result of tougher sentences and court backlogs.
Government officials say the pandemic is partly to blame, because it led to an increase in the number of people being held in prisons for longer, awaiting jury trial.
On Tuesday, Justice Secretary Alex Chalk told MPs there were currently nearly 16,000 people in custody awaiting trial and “plainly that has an impact”.
Under Operation Early Dawn, the Ministry of Justice says that it now needs to control the flow of cases reaching this first day in court because of the pressure on cells.
In a briefing sent to criminal solicitors, officials said their aim was to prioritise which defendants are dealt with.
In practice, this means some defendants who would expect to be sent from court to a remand prison cell will be told the start of their case is being delayed. That will mean police will have to release some of them on bail with a date to later attend court.
Using this mechanism is not unprecedented, but it is acknowledged by those in government to be a significant move in response to a difficult situation.
Early Dawn was first implemented in March in north-west England before officials concluded this week that it had to be extended to the whole country.
A Ministry of Justice spokesman admitted magistrates and police were notified late last night due to extreme pressure on the prison system.
He told the BBC: “To manage this demand we have brought on thousands of extra places at pace and will introduce strategic oversight of the transfer of remanded offenders from police custody to magistrate courts to maintain the running of the justice system.”
Last Friday there was 87,691 people in jail in England and Wales – just 1,200 below the maximum capacity.
Tom Franklin, chief executive of the Magistrates’ Association, said they were very concerned.
“Every case that is delayed has real-life consequences for victims, witnesses and defendants – and leads to magistrates and court staff sitting around waiting, rather than administering justice.
“That is a waste of resources, at a time when there are already large backlogs,” he said.
Shabana Mahmood MP, Labour’s shadow justice secretary, said the government was “stalling justice” and “leaving victims in limbo”.
“It is astonishing that lawyers and witnesses, let alone the public, are none the wiser on which cases will actually be affected,” she said.
Ministers have already authorised the extension of a rolling early release scheme for some offenders who are near to the end of their sentence.
The scheme will now direct the release to home curfew of some offenders up to 70 days before the end of their jail term – up from 18 days when the scheme was first introduced last October.
Separately, about 400 police station cells have been set aside to help prisons deal with overcrowding.
Law Society of England and Wales president Nick Emmerson said they had asked the Ministry of Justice for more information “to understand the full implications of this emergency measure”.
“What is crystal clear is the prison spaces crisis is a consequence of the government’s approach to justice including over a decade of underfunding of our criminal justice system, which also sees chronic shortages of judges and lawyers, huge backlogs of cases and crumbling courts,” he said.
