Victorian jails could be closed and sold off to help fund an upgrade of Britain's "out of date and overcrowded" prison estate, Michael Gove has indicated.
The Government must consider shutting down "ageing and ineffective" city sites and replacing them with new buildings, the Justice Secretary said.
In his first speech on prisons since being appointed in May, Mr Gove also floated the idea of linking an offender's release date to their academic performance behind bars.
The proposals are part of a drive to cut re-offending rates by improving standards in prisons so that criminals are more prepared for life when they return to society.
Mr Gove said violence towards inmates and staff has risen - driven in part by the increasing availability of designer drugs.
"Unless offenders are kept safe and secure, in decent surroundings, free from violence, disorder and drugs, then we cannot begin to prepare them for a better, more moral, life," he said.
"Our current prison estate is out of date, overcrowded and in far too many cases, insanitary and inadequate.
"There are many good people working in our prisons today but they are working in conditions which make their commitment to rehabilitation more and more difficult to achieve."
Measures to improve security are under way, including a trial of new body-scanning equipment to prevent contraband entering prisons, but more must be done, Mr Gove said.
"That's why I think we have to consider closing down the ageing and ineffective Victorian prisons in our major cities, reducing the crowding and ending the inefficiencies which blight the lives of everyone in them and building new prisons which embody higher standards in every way they operate," he said.
"The money which could be raised from selling off inner city sites for development would be significant.
"It could be re-invested in a modern prison estate where prisoners do not have to share overcrowded accommodation but also where the dark corners that facilitate bullying, drug-taking and violence could increasingly be designed out.
"By getting the law right, getting operational practice right and getting the right, new, buildings we can significantly improve the security and safety of our prisons."
No indications of which prisons could face closure, or when, have yet been given.
However, Mr Gove singled out HMP Pentonville, a Victorian institution opened in 1842, as "the most conspicuous, most recent, example of the problem we face".
He said the prison in north London is supposed to hold 900 inmates but now houses 1300 and referred to inspection findings such as widespread drug-taking, blood-stained walls and piles of rubbish.
"Of course, Pentonville is the most dramatic example of failure within the prison estate, but its problems, while more acute than anywhere else, are very far from unique. Overall, across the prison estate, the number of prisoners in overcrowded cells is increasing," the minister added.
At the centre of Mr Gove's approach is a focus on education for prisoners. In his first announcement on prisons earlier this week, he eased the restrictions covering inmates' access to books.
"The most important transformation I think we need to make is not in the structure of the estate, it's in the soul of its inmates," he said.
Arguing that prisons are not playing their part in the "crucial" function of rehabilitating offenders, Mr Gove outlined his support for the concepts of "earned release" for offenders who commit to serious educational activity and attaching privileges to attendance and achievement in learning.
Currently, most offenders serving fixed term sentences are released automatically at the half-way point. Justice officials are set to look at how Mr Gove's proposals could be implemented in practice in the coming months.