The justice secretary has formally abandoned proposals for three giant Titan jails.
Jack Straw also outlined plans to build new, smaller jails near London and in other parts of the country.
But the plans are being overshadowed by the announcement that Straw is abandoning his £1.3bn Titan prison plans, as ministers face increasing pressure over public spending.
But Straw is still optimistic on meeting targets for 96,000 new prison places by 2014.
Additional prison places in the last year have gone up from 60,000 to 85,000, he told the BBC.
"There are already 8,500 firm places in the pipeline or about to be built in the next five or six years," he said.
"My statement this afternoon will be about how we take the overall proposals forward.
"The decisions I will be announcing this afternoon will be in response to the consultation, not about a response to the Treasury."
And a Ministry of Justice spokesman confirmed that total prison capacity would still rise as expected.
"We have consulted on plans for new prisons and have listened carefully to all views," he said.
"The justice secretary will make a statement on this issue shortly and we cannot comment further on speculation.
"Since 1997, the government has increased prison capacity by 24,000 places and we remain on course to increase the total number to 96,000 by 2014."
Straw also announced today that family courts in England and Wales are to be made more accessible to the media.
The new rules will allow more opportunities for journalists to report on the work of the courts, whose secrecy has often been criticised.
But many cases that the media will be dealing with will still have reporting restrictions. And the new regulations will still allow for journalists to be excluded from courts.
The justice secretary told the BBC that the new guidelines will increase transparency.
"There is a lot of criticism that the family court system not only protects the identities of those involved that it should do, but essentially it has been a secret system and therefore not properly accountable," he explained. "I want to produce a better balance."
But under the guidelines, the press will still be excluded from cases concerning children unless the court gives specific consent.
"It is quite right that if children are involved in a case, it is quite right that their identities should be protected," Straw told BBC Radio 4's Today programme.
"So too, in many circumstances, should the identity of many adults in an adult family dispute. But it is still correct that the press should be allowed to attend and, subject to reporting restrictions, should be able to report the substance as well as the gist of what is going on."
And he defended the "law-abiding media", stating: "It is extremely rare for them ever to break a restriction that is imposed.
"I really want this change to happen. I am very committed to it."


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