The Government has announced it will now build the new prison in Thornton Hall in Dublin in three stages.
The Minister for Justice said the first 400 cells will be built in four years' time and that the prison will have 1,400 cells for 2,200 prisoners.
Dermot Ahern has described Thornton Hall as the cornerstone of the Government's prison policy.
Mr Ahern said it was 'a bit much' for every prisoner to have a cell of their own.
He said that doubling up was 'a nonsense' and that this would be the most modern cell accommodation.
The Minister also said that Mountjoy Prison would not now be closed when Thornton Hall is built, but phased out if possible.
He also confirmed that over €40m had been spent on the project so far.
However, the Irish Penal Reform Trust said despite the overcrowding problems in the prison system, the Government is still planning a new prison around doubling up.
The St Margaret's/Rolestown Action Group said Thornton Hall is still the wrong site and the hidden costs of preparing it were 'astronomical'.
The tender for the construction of the first 400 cells for 700 inmates will be issued next year to be completed in 2014.
The contract for the access road is to be signed this week, while the tender for the perimeter wall is to be issued in September.
Labour's Justice Spokesperson Pat Rabbitte said Thornton Hall was 'one of the most expensive, misconceived and poorly planned projects in the history of the State'.
He added: 'This has turned into a shocking white elephant for which Minister Ahern and Michael McDowell must share the responsibility.'
Fine Gael Justice Spokesperson Alan Shatter said: 'This Government's ability to waste taxpayer's money is astounding.'
The Prison Officers Association has also expressed serious concern at the revised lan for Thornton Hall.
