Three 2,500-person prisons will be replaced by smaller jails after pressure group opposition

Government plans to build three “Titan” prisons at a cost of £1.2bn are to be scrapped in favour of a series of smaller jails.

It is understood that justice minister Jack Straw has abandoned proposals for three 2,500-person prisons because of continued opposition to the programme from penal reform groups.

The government did not immediately confirm the story but said it was due to make an announcement on the issue shortly.

A spokesman said: "We have consulted on plans for new prisons and have listened carefully to all views. 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, who drew up proposals for the mega-sized jails in 2007 in response to prison overcrowding, is expected to announce next week that the government now plans five 1,500-place prisons, only two of which will go forward immediately.

The news will be a further blow to firms in the prison-building supply chain after weeks of uncertainty about the future of the programme. Big schemes including the £150m Featherstone jail plus PFI projects at Maghull and Belmarsh have been hit by delays and the Ministry of Justice is trying to cut programme costs by 10-20%.

In Wednesday’s budget, the government said all new-build prisons would be built by the private sector.