Northern Ireland's main high-security jail is to be broken into three mini prisons, the justice minister said.
Remand prisoners awaiting trial and those convicted but posing a low or medium risk will be fully separated from inmates presenting the greatest danger, like dissident republicans, at Maghaberry in Co Antrim.
Minister David Ford also said there was a "convincing case" for retaining Magilligan prison in the north west. Prison officers demonstrated at Stormont last week demanding that it be kept open.
Mr Ford said: "Following consultation, I have decided to proceed with the proposal to reconfigure Maghaberry into three mini prisons - for remand prisoners, low to medium security prisoners, and those prisoners requiring high security - as suggested by the Prison Review Team.
"Not only will this create operational efficiencies, but it will also allow Northern Ireland Prison Service (NIPS) to deliver better tailored regimes to specific groups of prisoners within Maghaberry, and will help to underpin and reinforce work to rehabilitate offenders."
He detailed his outline estate strategy for prisons at the Stormont Assembly today.
"My intention is to create a discrete high-security facility within the main prison at Maghaberry, which would include provision for both separated (paramilitary) prisoners and those prisoners from the integrated population requiring high security," the minister said.
An independent report last year labelled parts of the Prison Service as ineffective and highlighted challenges posed by paramilitary inmates (who are already held in separate wings) and the rising general prison population. It said prison managers were overfocused on physical security, with excessive staffing levels and concessions to separated prisoners highlighting deficiencies in the regime for others.
Reviewer Dame Anne Owers recommended an early retirement scheme for long-serving staff and a recruitment programme to bring in fresh blood, which has been introduced.
A string of prisoners have committed suicide while in custody and there have been repeated calls for mental health reform in prisons.
Mr Ford said today: "There is a need to manage the difficult transition between prison and community, particularly for those prisoners who have received long sentences, if we are to achieve effective rehabilitation and reduce the risk of reoffending."
He intends to redevelop a prisoner assessment unit, located on the Crumlin Road, as a centre for prisoners approaching the end of their sentence.
"This will allow prisoners to benefit from being located within the community and able to access employment opportunities whilst providing appropriate support and supervision," he said.
Maghaberry officials have opened a new building housing 160 extra inmates and Mr Ford said good progress was being made on a new 240-cell accommodation block.
Sue McAllister became director general of NIPS on July 3 and has brought fresh thinking and perspective, Mr Ford said.
Twenty-two dissident republicans ended a dirty protest at Maghaberry linked to strip searching after the prison authorities began testing an electronic scanner as an alternative. Members of other dissident groups in the prison remain on protest.
Last week prison officers held a demonstration against proposals to close Magilligan in Co Londonderry, Northern Ireland's second largest jail, and handed a petition signed by thousands to the justice minister.
Mr Ford said there had been an encouraging positive approach to partnership working shown by local councils and business representatives in the north west.
"I am now of the opinion that a convincing case might be made for the retention of a prison in the north west on the Magilligan site - and of course I would welcome the positive impact this could have both for Magilligan staff and for the local economy," he said.
Adequate rehabilitation opportunities need to be identified and provided while family links should be better sustained, Mr Ford said, but added that he was now inclined towards retaining a prison on the site if that can be done.
He plans the reconfiguration of Hydebank Wood for young offenders as a secure college offering a full programme of skills-based activities and support for inmates with poor numeracy and literacy. The minister is committed to developing a new separate secure custodial unit for women.