Two jails are to be recategorised, allowing almost 600 criminals, including killers and sex offenders, to reenter the community on temporary licences, according to the Prison Service.
Kennet prison in Liverpool will be changed from a category C jail where inmates are held in closed conditions to a category D jail, meaning it will hold those suitable for open status.
Around 256 prison places at the category C Featherstone jail near Wolverhampton will also be changed to make way for category D prisoners.
While the recategorisation will not see any difference in physical security and make-up of the two jails, the category D prisoners will be able to be released on temporary licence, the Prison Service said.
Kennet prison in Liverpool, which is being downgraded to a category D jail
Some of the prisoners who will be held in the new category D places are being held in higher-security conditions than they require and moving them is in fact a move to cut costs, the Prison Service said.
No significant reductions of staff are expected at either Kennet or Featherstone, but "any limited reductions" will come from natural wastage and redeployment or, if necessary, voluntary exits, a spokeswoman added.
Prisons minister Crispin Blunt said: "The prison estate should meet the needs of the prison population.
"Where prisoners have been assessed as suitable for open conditions, wherever possible they should be accommodated in appropriate conditions to progress their reintegration into the community."
By April next year, Kennet prison, which has an operational capacity of 342, will focus on those deemed suitable for open conditions or for release on temporary licence.
In changes to be completed early in the next financial year, Featherstone jail will offer 256 category D places, increasing its operational capacity by 16 to 703 as it continues to offer 447 category C spaces.
Featherstone jail will see some of its prisoners moved to category D
Geoff Dobson, of the Prison Reform Trust, welcomed the moves to increase access to open prisons for prisoners serving indeterminate sentences and to reduce overcrowding in private sector prisons.
But he warned: "They could be seen to be tinkering at the margins of problems without a wider and stronger commitment to enable the many thousands of prisoners who do not have a fixed release date to progress through the system.
"This should be based on the premise that someone is ready for release at tariff point unless it can be demonstrated that they continue to pose a significant risk to public safety.
"It should also include a multi-disciplinary approach involving health and social services together with substantial development of the intermediate estate, hostels and supported housing available to prisoners on release."