The Government said hundreds of jobs are being created as work gets underway on a £286m prison just south of Leicester.
The Category C resettlement prison – housing prisoners in the second-lowest risk category approaching the end of their sentences – will cost £116 million more than first thought.
It will hold 1,680 adult inmates and is being built on the site of the former Glen Parva Young Offenders Centre, which held half that number.
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The Government told the BBC the jump from the original £170 million budget was down to inflation and the complexities of preparing the site.
It has contracted developers Lendlease to build the jail, parts of which will be made off-site, with the aim of speeding up work and making its more environmentally friendly, with less waste.
The Government said most of the ground materials will also be recycled, with 2.6 million cubic ft of existing material re-used, which it said would save more than 10,000 vehicle journeys onto and off site.
The prison is expected to be completed by spring 2023, creating around 150 jobs and apprenticeships during construction and around 600 permanent roles when it opens.
There will also be opportunities for ex-offenders to be involved – which it is hoped will help reduce reoffending.
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Prisons Minister Lucy Frazer QC MP said: “The new jail at Glen Parva is another milestone in our plan to transform the prison estate, providing the environment needed to steer offenders away from crime.
“As well as rehabilitating prisoners and keeping the public safer, the prison will be a major boost to the local economy.
“Hundreds of jobs will be created during and after construction, sending a clear signal that this government is committed to supporting communities and infrastructure across the country.”
Simon Gorski, Lendlease’s managing director for Construction in Europe, said: “We have a proven track record of delivering projects that can deliver economic, social and environmental benefits for the communities where we work.
“Our partners trust that we will deliver long lasting value and we will be entirely focussed on delivering the very highest standard of building.”
The new prison at Glen Parva is one of two being built by this Government alongside a new jail at Wellingborough in Northamptonshire.
Both prisons will create 3,360 prison places in addition to a £2.5 billion programme to create 10,000 prison places.
A Government spokesman said: “As category C resettlement prisons, the new jails will provide prisoners with the opportunity to develop their own skills so they can find work and resettle back into the community on release, reducing reoffending.”