Theresa May has raised concerns at the emergency legislation being rushed through parliament in the wake of the Streatham attack.
The former Prime Minister said that the focus should be on the rehabilitation on prisoners because terrorists offenders will still "be released at some point".
Ministers want to get legislation on to the statute book by February 27, before the next terrorist prisoner comes up for release.
It follows the Streatham terror attack earlier this month, when Sudesh Amman stabbed two bystanders with a knife he had grabbed from a shop.
The 20-year-old was jailed in December 2018 for possessing and distributing terrorist documents, but had been freed midway through his sentence less than a fortnight earlier.
It was the second attack in three months to be carried out by a convicted terrorist, after Usman Khan stabbed and killed two people at Fishmongers' Hall near London Bridge in November.
He had been released nearly a year earlier, halfway through a 16-year jail sentence.
The former PM and Home Secretary said the Government was right to address the question of the "automatic early release of terrorist offenders, but but terrorist offenders will still be released at some point.
"That is why the issue of rehabilitation, the work that is done both in prison and when they are out of prison is so important.
"There has been many efforts of this over the years but as recent incidents have seen, that has not always been with success."
Mrs May's intervention seemed to acknowledge the failures of her own government on this issue.
She said that the UK would never be able to deal with the issue of terrorism "until we deal with the ideology that drives it."
She asked the Government to provide reassurances that they are "taking extra efforts to find new paths to ensure that we can turn people away from the extremism and the terrorism that takes other people's lives?"
The Justice Secretary Robert Buckland replied: "I can ensure her… that there is a constant, if you like a self-questioning, amongst those responsible for these particular programmes to make sure that they are properly calibrated, that they understand the particular drivers that mean that people are compelled to commit these acts and that the different distinctions between the types of offender that we see, and there are the myriad of different motivations, are fully understood and that rather than a blanket approach being taken, a case-by-case analysis is indeed very much at the heart of how we approach these matters."
Once the legislation has cleared the Commons, it will go to the House of Lords, where the Government has less control over the timetable.
However, in an emergency business statement on Tuesday, the Leader of the Commons, Jacob Rees-Mogg, indicated that ministers expected peers to facilitate its swift passage.
"The urgency and the message coming from this House is very clear to them and therefore I expect them to handle this in a reasonable manner," he told MPs.
The plans, which will affect around 50 prisoners, aim to make sure terrorist offenders serve two-thirds of their sentence before they are considered eligible for release, rather than the current halfway mark.
Before being freed they would need to be reviewed by a panel of specialist judges and psychiatrists at the Parole Board.
Attorney General Geoffrey Cox said there was a "plain public interest" in the change as he gave his support for the legislation.
Speaking at the Institute for Government in central London, he said: "I fully support the measures that are being taken in the House of Commons today.
"My judgment – and the judgment of the Government – is there is no illegality, on the contrary.
"The relevant declaration of compatibility has been made in connection with this legislation and that is because the convention of jurisprudence shows that questions relating to arrangements for release do not violate Article 7."
He added: "I think there is a plain public interest in this change being made – we've had two incidents in recent days and I think that the Government is responding to a legitimate and powerful public interest in ensuring that those who may well be a risk will from now on be subjected to a risk analysis before they are released."
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