Ministers will receive a recommendation this week that UK Detention Services should be awarded the contract to run the new local and remand prison near Redditch, in Hereford and Worcester, from next April.
The firm is a consortium comprising two British building firms - John Mowlem and Sir Robert MacAlpine and Sons - and the Correction Corporation of America (CCA). The consortium won the contract to construct The Wolds in Humberside, opened earlier this year, but not to run it.
CCA is the market leader in privatised prisons. Since its entry into the market nine years ago, it has won contracts for running 21 prisons in the United States and in Australia.
Some groups have expressed reservations. Stephen Shaw, of the Prison Reform Trust, said: 'My concern is that managers at Blakenhurst will be more accountable to shareholders 5,000 miles away than to the British public and the British Parliament.'
However, Nicholas Hopkins, speaking for the consortium, said: 'This is a UK-registered company with three equal shareholders - two British and one American.'
He said the contract was not pursued on purely financial terms, and Home Office sources confirm that companies tendering for the contract were competing on the basis of extra services and facilities being offered to prisoners.
It is believed that officials were impressed with UK Detention Services' plans to provide work and training for prisoners.
Mr Hopkins said: 'We would not be entering this tender singly on the basis of cost saving. CCA specialises in high quality provision. An active prisoner is a more content prisoner, and that makes the establishment safer and more secure for prisoners, staff, and the public.
'The prison service has not provided an adequate work programme. Companies in the neighbourhood have expressed interest in working with us.'
The consortium plans to use the experience of existing prisoners, many of whom will have a trade, to maintain the prison building. Then it intends to take on sub- contracting work from local engineering firms, and combine it with vocational training.
Mr Hopkins added: 'We hope that will mean that prisoners will be able to leave with better skills and qualifications.'
The Blakenhurst contract is part of a rolling programme of prison privatisation. The Wolds is a remand prison, and Blakenhurst will take sentenced prisoners as well as remand prisoners.Reuse content