Two jails will be recategorised to hold almost 600 offenders including killers and sex offenders who will be allowed into the community on temporary licences, the Prison Service has said.
Kennet prison in Liverpool will be changed from a category C jail where inmates are held in closed conditions to a category D jail holding those suitable for open status.
Some 256 prison places at the category C Featherstone jail near Wolverhampton will also be changed to make way for category D prisoners.
While the physical security and make-up of the two jails will not be altered, the category D prisoners will be able to be released on temporary licence, the Prison Service said.
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."
He added: "Our first priority remains the protection of the public, and I am committed to ensuring that robust risk management accompanies these projects given the importance of retaining public confidence in the effective rehabilitation of offenders."
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 will help 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.
The changes, which will start immediately, will affect indeterminate sentenced prisoners who have been set a minimum term they must serve before being considered for parole.
These include those sentenced to life in prison with a minimum tariff.
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.
Category C inmates cannot be trusted in an open prison but are unlikely to try to escape, while those assessed as category D present a low risk and are unlikely to escape.
Most of the existing category C prisoners at the jails will be transferred elsewhere, but a "small proportion" may remain at Kennet prison as it will function as a resettlement jail rather than a full open prison.
The G4S-run Oakwood prison, near to Featherstone, opened in April and can hold 1,605 category C prisoners.
Some 300 prison places which were brought in to private sector jails to cope with the demand generated by last year's riots will also be removed, saving almost £4.5 million a year.
These include 75 places at the Serco-run Dovegate prison in Uttoxeter; 32 at the Serco-run Lowdham Grange prison in Nottingham; 96 at the Sodexo-run Peterborough prison (male side); and 96 at the G4S-run Altcourse in Liverpool.