Private firm G4S has been selected as the preferred bidder to run a new "mega prison", the BBC understands.
It is believed the contract to operate the jail in Wellingborough, Northamptonshire, will be for 10 years at a cost of more than £300m.
The company has been told it has been chosen, but the contract has not been ratified and could be challenged.
An official announcement on the prison, which will hold 1,600 male inmates, is expected over the next few weeks.
A Ministry of Justice spokesperson said: "The operator competition has not yet concluded. We will set out confirmed details in due course."
The decision comes as a surprise after G4S was stripped of its contract to run Birmingham Prison following a damning inspection report which said it was in a "state of crisis".
The company also gave up running Medway secure training centre in Kent and Brook House immigration removal centre near Gatwick Airport after undercover filming by the BBC's Panorama programme showed inmates and detainees allegedly being mistreated.
However, G4S has been praised for its running of four prisons in England and Wales - Altcourse, Oakwood, Parc and Rye Hill.
It is thought three other companies - Sodexo, Serco and MTC Novo - bid to run Wellingborough, which is costing £253m to build and is expected to open next year.
A source with knowledge of the process said the G4S bid was not the "cheapest" but was regarded as of "higher quality" than the others.
Frances Crook, chief executive of the Howard League for Penal Reform, said: "It is disappointing that public money is being squandered on expanding the prison estate; extremely disappointing that public money is being poured into the coffers of G4S.
"At a time when we need to invest in jobs and the nation's health, it is shameful to waste money on the profiteers of punishment."
Shadow justice secretary David Lammy said: "When G4S ran HMP Birmingham there had to be an emergency takeover by the government after reports of drug dealing, violence, squalid conditions and poor leadership.
"It highlighted many of the problems with privatisation in the justice system. Serious questions must now be asked about why the government plans to hand the company control of the new prison in Wellingborough."
Wellingborough MP Peter Bone said: "My concern would be to make sure that whoever runs it, runs it properly."