Plans to overhaul the “failure” of the prison system in England and Wales are to be set out by the prime minister.
David Cameron will say high reoffending rates and violence in jails are “scandalous”.
A pilot scheme will see six governors given autonomy over how prisons spend their budgets and which education services are used.
Penal charities said reforms would not work if inmates were “crammed into filthy institutions with no staff”.
Legislation is expected to follow, so the plans for the “reform prisons”, as they are being called, can be adopted more widely.
Downing Street says Mr Cameron’s speech will be the first on prisons by a British prime minister for 20 years.
He will say that “current levels of prison violence, drug-taking and self-harm should shame us all”, with a typical week seeing 600 incidents of self-harm, at least one suicide and 350 assaults including 90 on staff.
He is also expected to say he is accepting the recommendations made in Dame Sally Coates’s review of prison education, due to be published soon.
These include a promise to protect the £130m prison education budget.
BBC home affairs correspondent Danny Shaw said it was highly unusual for a prime minister to take such a close interest in prison reform, but Mr Cameron wants to make it a “great progressive cause” in British politics.
Speaking on BBC Breakfast, Juliet Lyon, director of the Prison Reform Trust, said Mr Cameron’s proposals were “only part of the equation – you have got to look at what drives crime”.
She said the focus on prisons by the government was long overdue but it would be a “really steep challenge to try and sort it out”.
Frances Crook, chief executive of the Howard League for Penal Reform, said: “Prisons are currently violent and overcrowded. As such, they fail everyone: victims, the public, staff and prisoners themselves.
“Prison reform, however, is the tip of the iceberg…. We need action now to tackle sentence inflation and the profligate use of prison. Then the prime minister’s vision can become a reality.”
In his speech, the prime minister will say: “We need prisons. Some people – including, of course, rapists, murderers, child abusers, gang leaders – belong in them.
“For me, punishment – that deprivation of liberty – is not a dirty word.
“I never want us to forget that it is the victims of crime who should always be our principal priority. And I am not unrealistic or starry-eyed about what prisons can achieve.
“Not everyone shows remorse and not everyone seeks redemption.
“But I also strongly believe that we must offer chances to change; that for those trying hard to turn themselves around, we should offer hope; that in a compassionate country, we should help those who’ve made mistakes to find their way back onto the right path.”
Mr Cameron will say prisoners should be seen as “potential assets to be harnessed” and the “failure of our system today is scandalous”.
He will highlight figures showing 46% of all prisoners reoffend within a year of release, and say that cycle of reoffending costs up to £13bn a year and leads to more victims of crime.
The plan to give prison governors more autonomy develops ideas floated by Justice Secretary Michael Gove last year.
Citing the “success” of foundation hospitals and academy schools, he said giving governors a freer hand, especially over education, would allow them to be more imaginative and more demanding.
Prisoners who acquired new skills or qualifications could “earn” their release, Mr Gove suggested.
Last month, the outgoing chief inspector of prisons in England and Wales said conditions in adult prisons had deteriorated over the past five years.
The prime minister has already announced plans to find alternatives to custody for pregnant women or new mothers and confirmed that a pilot scheme to track offenders by satellite will launch later this year.
And in November last year the government said nine new prisons will open in England and Wales under plans to close “Victorian” jails in a bid to save about £80m a year.