Prisoners can now "Get out of jail free", simply by buying a raffle ticket.
HMP Kirkham, Lancashire, is selling tickets for the draw to inmates for £1, with the top prize a day of freedom.
But the scheme has been branded "fundamentally wrong" by local MP's and members of the Prison Officers Association (POA).
Glyn Travis, the area representative fof the POA said: "I think, as a prison officer, prisoners buying raffle tickets with public money to win a day out where they can go out and enjoy themselves is fundamentally wrong.
"I'm very disappointed that's what is happening at HMP Kirkham."
In order to enter, prisoners will have to sign up to serve Christmas dinner at a nearby elderly day centre.
But Conservative MP Michael Jack, whose Fylde constituency is home to HMP Kirkham and its 591 prisoners remains unimpressed by the scheme.
Mr Jack said: "I think the scheme to encourage prisoners to contribute to wider society through cooking a Christmas meal for elderly people who are considerably less well off than they are is a good idea.
"But to then link it to time out of prison, I think is incorrect."
HMP Kirkham is the largest of its kind in the UK, housing category D "low-risk" prisoners.
A spokesman for the Justice Secretary said: "Public protection is our top priority and the rehabilitation of offenders is a vital part of this process.
"HMP Kirkham holds low-risk prisoners in open conditions.
"All prisoners are rigorously risk-assessed before release on temporary licence and no prisoners are released if there are concerns for public safety.
"Only prisoners who meet the eligibility criteria are granted temporary release."
The "Incentives and Earned Privelige Scheme" was introduced to UK prisons in 1995, initially offering prisoners opportunities to wear their own clothes and access televisions.
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