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.
In 2009, the previous Labour government scrapped its plans for three 2,500-place Titan prisons.
Six entire prisons are closing plus one of the three amalgamated jails on the Isle of Wight.
The prisons that are to close are Bullwood Hall in Essex, Canterbury, Gloucester, Kingston in Portsmouth, Shrewsbury, and Camp Hill on the Isle of Wight.
The UK's oldest working prison, Shepton Mallet, in Somerset, is also among those to be shut.
Some 1,177 members of staff work at the prisons earmarked for closure. Staff will be offered re-deployment and voluntary redundancy.
Justice Secretary Chris Grayling said the prisons would be closed in the next few months.
Prisons in Chelmsford and Hull are also to be partially closed.
Around 854 staff are employed at the two prisons, although it is not yet clear how many posts will be affected.
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".
It said the cost of keeping prisoners in newer prisons was half as expensive as older jails.
But the justice secretary said: "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."
Mr Grayling added building a super prison was "not simply about incarcerating lots of people in one place".
"If you've got a big centre like that you've got the ability to put good training facilities at the heart of it because it's in all of our interests to make sure that people come out of prison with more education, more skills and they have a better chance of getting a job rather than going back to prison," Mr Grayling told the BBC.
Following the MoJ announcement, Mr Khan said: "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."
Mr Khan said the announcement had been "about short-term gain, with vague commitments to the possibility of a new prison being built somewhere down the line".
The Howard League for Penal Reform said plans for a super prison were "a titanic waste of money that will do nothing to cut crime".
"Two years ahead of a general election campaign, the justice secretary is giving his desire to 'sound tough' a higher priority than giving taxpayers value for money or protecting public safety," said the charity's chief executive, Frances Crook.
Juliet Lyon, director of the Prison Reform Trust, said closing prisons and reducing prison numbers "offers major social and economic gains" but warned 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" instead of investing in crime prevention, healthcare and community solutions to crime.
She also said small community prisons tend to be safer and better at reducing re-offending than large ones.
Joe Simpson, of the Prison Officers' Association, said: "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.
Our correspondent also 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.
Prior to Thursday's announcement, five other jails have been closed since the coalition government came to power in May 2010.
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.
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, would be able to hold up to 1,260.
The MoJ 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.