The UK is to spend £25m on building a prison in Jamaica so that foreign criminals in the UK can be sent home to serve sentences in the Caribbean.
Prime Minister David Cameron announced the deal as he started a Jamaica visit.
The project has been agreed to break the deadlock in negotiations over a prisoner transfer deal between the two countries.
More than 600 Jamaican nationals are in UK jails but cannot be deported because of Jamaica's poor prison conditions.
Officials say the foreign aid-funded deal could save taxpayers £10m a year when transfers begin in 2020.
More than 300 existing offenders are expected to be sent back under the Jamaica prison scheme, which covers those sentenced to at least four years who have 18 months or more left to serve in custody.
The UK is contributing about 40% of the cost of building the planned jail, which would hold 1,500 people.