Security firms G4S and Serco have been accused of overcharging the government tens of millions of pounds for electronic tagging services.
Senior probation officers have criticised Government's plans to involve private and charity groups in the supervision of offenders.
Frightened homeowners who react when confronted by burglars will get more protection under new plans, the Justice Secretary will announce.
Justice Secretary Chris Grayling has told the House of Commons that security firm G4S has refused to take part in an additional audit so the Government can rule out the possibility that dishonesty was involved in any of the contracts, while Serco has agreed to this demand.
Serco has agreed to withdraw from the current tender process for electronic monitoring, while the Justice Secretary is to instigate moves to exclude G4S as the company is still attempting to bid.
The Government says it has been overcharged "tens of millions of pounds" by G4S and another firm, as part of its electronic tagging contract.
Justice Secretary Chris Grayling told the House of Commons the Government had been charged in cases when Serco and G4S were not providing electronic tagging - and in a small number of cases when the offender was known to have died.
Justice Secretary Chris Grayling has told the House of Commons he is to ask the Serious Fraud Office to investigate security firm G4S over the handling of its electronic monitoring contract after the company refused to take part in an additional forensic audit.
A network of resettlement prisons has been unveiled by the Justice Secretary in a bid to help inmates rehabilitate in the community where they are released.
The introduction of 70 resettlement prisons across England and Wales will see the majority of offenders released from jail in, or close to, the area in which they will live.
Chris Grayling said: "Rehabilitation in the community must begin behind the prison walls and follow offenders out through the gates if we are to stand a chance of freeing them from a life of crime."
Existing prisons up and down the country will function as resettlement prisons with a trial starting in north-western England in the autumn.
The Justice Secretary plans to build a £250 million super-prison in North Wales, while he announced a raft of prison closures covering some 2,600 inmate places in January.
A £250 million super-prison that could hold up to 2,000 inmates will be built in North Wales, Chris Grayling announced.
The Justice Secretary said the new jail is expected to bring around £23 million a year to the regional economy and create around 1,000 jobs.
Mr Grayling first discussed plans for a super-prison in January as he announced a raft of prison closures covering some 2,600 inmate places.
Chief Secretary to the Treasury Danny Alexander confirmed to the Commons that £100 million would be invested in the construction of the prison in 2015/2016 as part of a multi-billion investment programme.
The project will ultimately receive £250 million of investment from the Government.
Chris Grayling has attacked the policy agenda of the European Commission, branding it as putting jobs at risk.
In an interview with the Daily Telegraph, he said: "This is a prime example of European legislation which will evidently have an impact on the competitiveness of Europe and will impact on employment in Europe at a time when we have really very serious levels of unemployment in the EU.
"They all too often seem completely oblivious to the potential consequences of what they are doing. Britain and Europe are in a global race.
"We face intense competition from around the world. UK and EU business are fighting through difficult times to be able to keep up employment levels and win business around the world.
"If the EU keeps on trying to produce more and more complex laws that put more and more costs on to business, it's just going to cost jobs, and that would be mad.
"The people bringing forward proposals at the moment seem to have little idea of the reality of the political and democratic challenges."
A Tory cabinet minister has criticised "mad" Brussels red tape, warning that it will end up costing British jobs.
In an interview with the Sunday Telegraph, Justice Secretary Chris Grayling accuses EU policy-makers of being oblivious to the scale of the economic challenge from China and other global rivals.
"It's become obvious that many senior people in Brussels are simply not living in the real world," he says in the interview.
"They are caught up in a dogma that says the solution to every problem is more European regulation."
Justice Secretary Chris Grayling has emphasised the government's plans to "harness the mentoring skills of the voluntary sector" in an effort to stop prisoners re-offending.
No extra funding will be allocated to the project, but Grayling said that this was "a classic example of where the public sector needs to do more for less."
"We need a [probation] system that is less bureaucratic, more focussed on delivery, and I think that by driving down the costs that we have, we can release the funds that we need."
Prisons minister, Jeremy Wright said new prison reform plans are aimed at "making sure people turn their lives around".
Offenders leaving prison could soon serve at least a year under supervision once they are back in the community.
Under the proposals, a network of around 70 "resettlement prisons" will be created so nearly all offenders will be released into the area in which they will live and be supervised.
Speaking to Daybreak he said: "We want to make sure that [ex-prisoners] stay in one place long enough to engage in the rehabilitation that they need", he added, "its important that we have some kind of control over them".