A report on the prison system published by the Oireachtas Committee on Justice has severely criticised the Government's policy on prisons.
The report, Alternatives to Fines and the Uses of Prison, recommends capping the number of available prison places at a point to be agreed at political level, with a greater use of fines to punish offenders.
The report was prepared by the Committee on Crime and Punishment, a sub-group of the Joint Committee on Justice, Equality, Defence and Women's Rights.
The chairman of the subgroup, Mr Jim Higgins, of Fine Gael, said Mr O'Donoghue had been on an "incarceration binge" since he became Minister for Justice in June 1997. The finding of the committee report, he said, was that "prison should be the last resort rather than the first resort, as it is at the moment".
The report says that despite popular belief, imprisonment rates "have a very small impact on crime rates and can be lowered significantly without exposing the public to serious risk".
The latest figures from the Department of Justice indicate that there are 2,932 people in prison, with a total of 3,156 prison officers. The average annual cost of keeping a person in custody is now £53,400.
The report recommends that unsupervised temporary release should be abolished. It also suggests that a new parole board be established with the power to order prison release.
A system of early release is also recommended.
The report calls for a total overhaul of the system for using fines as an alternative to prison. Fines are "much less likely" to be used in Ireland than in either England or Wales. The report proposes greater use of fines and a change to the current situation of imprisoning those people who default on fines.
In 1994, some 2,173 committals to prison were for the non-payment of fines. The report recommends that where a fine is unpaid a range of alternative sanctions including community service and the imposition of a curfew should be considered.
Mr Higgins said the situation that, in 1994, two in every five people committed to prison were jailed for being in default of payment of fines was "intolerable".
A spokesman for the Department of Justice said the Minister would be studying the report with interest. However, he said Mr O'Donoghue was "fully satisfied that the Government's strategy in tacking crime has been working very successfully". The report was welcomed by the Irish Penal Reform Trust.