Northern Ireland's prisons minister Paul Goggins has announced the construction of a new 800-capacity jail at the site of the existing Magilligan Prison in Co Derry.
The new prison is expected to cost €300m (£215m). Work is set to begin within five years in 2011/12. It will be built on a phased basis and could be completed by 2015.
Mr Goggins, who was at Magilligan to unveil the plan, said the investment was necessary in the light of an increasing prison population and ageing facilities.
Mr Goggins also outlined a €98m (£70m) short-term initiative to provide 400 additional cells at the existing Magilligan site and at Maghaberry in Co Antrim while the new facility for male inmates is being developed.
As well as rebuilding the Magilligan complex, the Minister said it may be necessary to plan for a third major prison in Northern Ireland in the long term.
He said a major announcement with regard to increasing provision for female prisoners would be made early in the New Year.
The prison population in Northern Ireland has grown steadily over the past number of years from an average of 926 in 2001-2002 to just over 1,400.
It is projected the total of prisoners will rise over the next 15 years to between 2,500 and 2,750, with the adult male population being the fastest growing sector.
East Derry MP Gregory Campbell of the DUP welcomed the announcement. He said the wider Limavady area had suffered countless job losses over the past number of months and the substantial expansion of Magilligan prison would provide a significant boost to the local economy.
