Ministers have cancelled plans for a controversial £100m prison to be built and run by the private sector. In a dramatic shift away from the plans of the previous executive, Kenny MacAskill, the Justice Secretary, and the cabinet have agreed the new 700-cell prison near Glasgow will be run by the public sector.

He will announce today that the tendering process for the replacement of Low Moss Prison at Bishopbriggs on the outskirts of the city is to be suspended.

Instead, bids will be invited from the private sector to build and design a new prison that will be operated by the public sector.

He will also announce a £120m capital funding package for the construction of the prison and further investment in modernising the ageing estate.

Mr MacAskill said: "If I had allowed the private-sector contract for Bishopbriggs to progress we would have had around a quarter of prisoners in Scotland in private-sector jails - some five times the level of private-sector involvement in the United States.

"A modern prison environment must be one where staff can work with high-risk offenders to tackle reoffending - enhancing public protection in the process. Public safety must be paramount, not private profit. We want to rebuild a Scottish Prison Service that is exactly that - a public service not a management agency.

"That's why I am proud we are delivering on our manifesto so that the replacement prison at Bishopbriggs will be run in the public sector, for the public good, and not for private profit.

"We are drawing a clear line in the sand in terms of future policy. Prisons focused on protecting the public from serious and dangerous offenders should be publicly run by dedicated, professional public servants."

He added: "Rather than filling up prisons with minor offenders and building private prisons that cost the taxpayer hundreds of millions of pounds, we should ensure that prisons are used to detain dangerous criminals and punish serious offences. These investments are part of our wider strategy for managing offenders in an appropriate and responsible way that will help reduce reoffending and enhance public protection."

Mr MacAskill had hoped, in line with the SNP manifesto, to ensure all of Scotland's jails were run by the public sector. However, as The Herald revealed last month, he was told this would be prohibitively expensive and that the 25-year PPP contracts were almost impossible to withdraw from.

Last year, the prison service signed a contract for HMP Addiewell in West Lothian which will cost £370m over 25 years.

The private sector will continue with plans to build and run the new Addiewell prison and Kilmarnock will continue to be operated by the private sector.

Mr MacAskill will stress today that the cancellation and retendering of the Bishopbriggs contract is part of a wider strategy that includes the review of community sentences.

He is committed to seeing more low-risk offenders dealt with through work-based community sentences that involve some "payback" for local communities - for example, work to clear graffiti.

He is also determined to make speedy progress with the provision of replacement prison capacity fit for purpose, but more importantly better equipped to work with high-risk offenders, enhancing rehabilitation and public protection in the process.

The new prisons are being built to deal with increasing demand and problems with overcrowding.

Scotland already has one of the highest prison populations in western Europe in relation to its population. The Custodial Sentencing and Weapons Bill, which has just gone through parliament, could mean an additional 1400 people being locked up.

However, Mr MacAskill is keen to reverse the trend of the country's burgeoning prison population.

The move comes as ministers prepare for an in-depth review of what prison should be used for. A consultation and debate is expected to be launched by ministers this autumn.

A recent report commissioned by the Scottish Consortium on Crime and Criminal Justice, the umbrella organisation for groups including the Howard League and Sacro, suggested that Scotland will need seven new prisons if policies are not changed.

Professor Alex Spencer, former head of rehabilitation at the prison service, recommended abolishing prison sentences of six months or less, in line with the SNP's manifesto; ending the practice of children being sent to jail; cutting the number of female inmates; and capping the remand population.

Low Moss opened as a temporary prison in 1969, using Second World War RAF dormitories to house inmates. The poor-quality accommodation, with large numbers of prisoners sharing dorms, has frequently been criticised by inspectors.