Ministers are considering letting criminals serve their sentences in Estonian prisons in a bid tackle the UK’s overcrowding crisis.

The Ministry of Justice said it was investigating “all viable options” to increase capacity because prisons were “on the point of collapse”.

It is understood the Baltic state has offered to rent out spare capacity to other countries

Government sources said the controversial solution was “on the table” because of the severity of the situation.

Men’s prisons in England and Wales nearly ran out of cells last month, with just 83 spare spaces.

Shabana Mahmood, the Justice Secretary, and Liisa Pakosta, her Estonian counterpart, were expected to discuss prison leasing on the sidelines of a Council of Europe event in Vilnius, Lithuania, on Thursday.

Speaking to the Telegraph, Ms Pakosta said: “The UK and Estonia have a history of successful international co-operation, and such a partnership would create further opportunities to benefit and learn from each other.”

Sending offenders to Estonia, a nation of 1.3 million people, was first proposed by Alex Chalk, the former justice secretary, at last year’s Tory conference.

Reports in August suggested Magistrates haD been ordered to delay jailing criminals in a bid to ease prison overcrowding.

Court of Appeal judge Lord Justice Green, who is the deputy senior presiding judge for England and Wales, issued what is known as a listing direction to magistrates’ courts managers in the two countries, saying offenders likely to be jailed should have their sentencing hearings postponed until the Government’s plans to free thousands of offenders early from prison come into force next month.