Six prisons are to close in England, the Ministry of Justice has announced, leaving a cut of around 1,200 places before four new mini-prisons and one "super prison" are built.
Some 2,600 offenders are held at the prisons targeted for closure, plus three sites which will be partially shut down.
Prisons at Bullwood Hall, Canterbury, Gloucester, Kingston, Shepton Mallet and Shrewsbury will close, while Chelmsford, Hull and Isle of Wight will see their accommodation slashed.
A spokeswoman for the Ministry of Justice told The Huffington Post UK that the prisons would shut their gates around April.
But the MoJ has recently opened the G4S-run HMP Oakwood near Wolverhampton, which has a normal capacity of 1,600 prisoners.
It is expected to save £63 million a year.
The spokeswoman told HuffPost UK that prisons currently had "a lot of space capacity".
The MoJ will also launch a feasibility study on what would be Britain's largest prison, which could be built in London, the North West or North Wales, holding more than 2,000 prisoners.
Four new mini-prisons known as houseblocks, with a total capacity of 1,260, will also be built, provisionally in Parc, South Wales, Peterborough in Cambridgeshire, the Mount in Hertfordshire, and Thameside in London.
The MoJ told HuffPost UK that when those are built, prison places will be similar to 2010 levels, having dropped in 2011.
Justice secretary Chris Grayling said in a statement: "We have to bring down the cost of our prison system, much of which is old and expensive.
"But I never want the courts to be in a position where they cannot send a criminal to prison because there is no place available.
"So we have to move as fast as we can to replace the older parts of our prison system."
Shadow justice secretary Sadiq Khan criticised the shortfall as prisons closed before others opened, saying there were "no replacement places guaranteed in the short term".
"The public will want reassurance that there's enough prison places over the coming years to keep safely behind bars those found guilty of serious crimes, and that enough is being done to rehabilitate and reform prisoners to stop them re-offending."
Khan said the government cancelled Labour's rolling programme of updating prisons and slashed investment by 69% since 2010.
He said: "You don't magic new prison places out of fresh air in an instant to replace those being closed - it takes a stable rolling programme of investment, with many years of planning and construction."
The plans for the super-prison appear to contrast with the views of Grayling's predecessor Ken Clarke who was an advocate of rehabilitation rather than incarceration.
The young offenders institution at HMP Ashfield is to be converted into a full adult prison, the MoJ added, while some 200 contractually crowded places at private prisons will be decommissioned.
The average cost at new prisons, like Oakwood, is £13,200 per place, the MoJ said, which is less than half the average cost of existing prison places, particularly in older facilities, some of which date back to the 18th century.
Some 83,632 inmates were behind bars as of last Friday, down from the record high of 88,179 after the summer's riots in 2011.
MoJ forecasts show the population could hit 90,900 by 2018.
Plans to build a new super-prison are likely to draw comparisons to Labour's £2.9 billion proposal for three 2,500-capacity "Titan" jails, which was scrapped in 2009.
The Howard League for Penal Reform said plans for a super prison were "a titanic waste of money that will do nothing to cut crime".
"Two years ahead of a general election campaign, the justice secretary is giving his desire to 'sound tough' a higher priority than giving taxpayers value for money or protecting public safety," said the charity's chief executive, Frances Crook.
Juliet Lyon, director of the Prison Reform Trust, said: "Closing prisons and reducing prison numbers offers major social and economic gains but it would be a gigantic mistake if the justice secretary were to revive the discredited idea of titans and pour taxpayers' money down the prison-building drain, when the coalition government could invest in crime prevention, healthcare and community solutions to crime."
The Public and Commercial Services (PCS) union said the decision to close six prisons and part close three facilities was "irresponsible", while imminent redundancies will hit local economies.
PCS general secretary Mark Serwotka said: "These closures are unnecessary, irresponsible and amount to more privatisation by stealth.
"The fact this is happening without any public debate or discussion ought to be a national scandal and we urgently need an independent review to look at the impact of prison privatisation on our communities, staff and prisoners."