Justice Secretary Chris Grayling has said the announcement of four prison closures and two new "super" prisons was part of a "process of new for old in the prison system" aimed at creating more places.
He said a new prison in Wrexham would be Britain's "biggest prison" and would meet the need for capacity in north wales, and a shortage of places in the north west.
Mr Grayling said there was no plan for so-called "titan" prisons, with one single big building holding thousands of prisoners, and added that the new jails would be a spread out over a "campus" of individual blocks holding a few hundred prisoners, with shared facilities.
The Ministry of Justice has confirmed four 'mini-prisons' – being built to create 1,200 new places at HMPs Parc, Peterborough, the Mount and Thameside - will be accepting prisoners from September 2014.
Justice Secretary Chris Grayling explained plans to create two 'super jails' in England and Wales is aimed at modernising the UK's prisons, reducing costs and increasing prison places.
He said: "The Feltham site in West London is a very large one, and is an obvious option for a major new project to help meet the challenges we face in London and the South East.
"I'm also really pleased that we have reached agreement on the new prison in Wrexham. It will provide a real boost to the local economy in North Wales over the next few years, which is one key reason why the Chancellor has made sure we have the money for the project.
"Of course the reorganisation of our prison estate which we are undertaking means some difficult decisions - but we have to make sure that we have modern, affordable prisons that give the best opportunity for us to work with offenders to stop them committing more crimes when they leave."
A further four prisons are to due close, the Government has said, as it confirmed plans to build two new "super" jails in England and Wales.
Blundeston in Suffolk, Dorchester, in West Dorset, Northallerton in North Yorkshire and Reading prisons will close, the Ministry of Justice (MoJ) said.
The announcement was made as the MoJ confirmed plans to build a 2,000-place new prison in Wrexham, North Wales. Feasibility work has also started on a second large prison to be constructed in the south east of England.
The work will focus on the possibility of replacing the existing Feltham Young Offenders Institution in west London with a large new adult prison and a new youth facility on adjoining sites in west London.