Seven prisons are to close and two more will be partially shut in England.
The Ministry of Justice said it would result in the loss of 2,600 places from "old and uneconomic" prisons and is expected to save £63m per year in running costs.
It says it also plans to build a new super prison with 2,000 places.
Shadow justice secretary Sadiq Khan said people would want reassurance that there would be enough prison places in coming years.
The proposed super prison would be around 25% bigger than Britain's existing largest facility and a feasibility study into its construction is to begin.
The super prison would be in London, north-west England or north Wales.
The seven prisons that are to close are Bullwood Hall in Essex, Canterbury, Gloucester, Kingston in Portsmouth, Shepton Mallet in Somerset, Shrewsbury, and Camp Hill on the Isle of Wight.
Prisons in Chelmsford and Hull are also to be partially closed.
End Quote Chris Grayling Justice SecretaryWe have to move as fast as we can to replace the older parts of our prison system"
The MoJ said six prisons were to close as it listed the Isle of Wight changes as a partial closure.
It said: "Our strategy for the custodial estate is to ensure that we have sufficient places to meet the demand of the courts whilst securing best value for money for the taxpayer."
Custodial arrangements for women are to be reviewed and the results are expected by the summer.
The MoJ said women offenders had "particular needs" and facilities for females should be "organised as effectively as possible to meet gender specific requirements whilst also delivering best value for the public".
Justice Secretary Chris Grayling said: "We have to bring down the cost of our prison system, much of which is old and expensive.
"But I never want the courts to be in a position where they cannot send a criminal to prison because there is no place available.
"So we have to move as fast as we can to replace the older parts of our prison system."
Following the announcement, Mr Khan said the government was closing the prisons "with the loss of 2,600 prison places over the next three months, with no replacement places guaranteed in the short term", which he said was "on top of the six prisons closed just to save money since May 2010".
"The public will want reassurance that there's enough prison places over the coming years to keep safely behind bars those found guilty of serious crimes, and that enough is being done to rehabilitate and reform prisoners to stop them re-offending," he said.
'Discredited idea'Mr Khan added: "This announcement is about short-term gain, with vague commitments to the possibility of a new prison being built somewhere down the line."
Meanwhile, Juliet Lyon, director of the Prison Reform Trust, said closing prisons and reducing prison numbers "offers major social and economic gains".
However, she added: "It would be a gigantic mistake if the justice secretary were to revive the discredited idea of titans and pour taxpayers' money down the prison building drain, when the coalition government could invest in crime prevention, healthcare and community solutions to crime."
She also said small community prisons tend to be safer and better at reducing reoffending than large ones.
Joe Simpson, of the Prison Officers Association, said: "We condemn the move. The government is willing to overcrowd public sector prisons in order to save money."
The BBC's Danny Shaw said the closures were the biggest for many years and would mean job losses among prison officers.
Smaller prisonsOur correspondent said proposals for a super prison were at a very early stage and stressed that this was "a long way" from a new site being built.
In 2009, the previous Labour government scrapped its plans for three 2,500-place Titan prisons it had planned.
The prison population in England and Wales currently stands at 83,632.
The operational capacity is 90,451.
In addition to the super prison being considered, Mr Grayling unveiled plans for four new mini-prisons known as houseblocks.
Under the proposals, those would be built at existing prisons at Parc in south Wales, Peterborough in Cambridgeshire, the Mount in Hertfordshire, and Thameside in London.
And, in total, they will be able to hold up to 1,260.
The announcement comes just days after the government unveiled plans to allow private firms and charities to supervise low-risk offenders on probation in England and Wales.
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