iCloud Library in Photos

I want my iCloud library to show up in photos so I can put them into albums and back them up manually. I do not want to put my entire Photo library on iCloud (far too much space required). Whenever I select the option in preferences it tells me my iCloud does not have enough space (because it is trying to pull my entire photos library into the cloud).

Is this possible? If not, is there a better way to do this besides logging onto the iCloud website, downloading and dragging the photos into Photos manually?