The praise came after Justice Minister Alan Shatter published the report of the Thornton Hall Review Group.
The group recommends the construction of a mini-Thornton Hall and the closure of Cork Prison and its replacement with a prison at Kilworth, Co Cork.
Mr Shatter said the recommendations had been “accepted in principle” by the Cabinet and said this was a “very important step”.
But he admitted he wouldn’t know if the capital funding to build the prisons would be available until the autumn, when the budget estimates are discussed.
The scaled-down Thornton would have 300 cells capable of accommodating 500 prisoners. The initial plans for the super-prison envisaged 1,400 cells, capable of housing 2,200 inmates.
The report said Cork Prison was “excessively overcrowded”, with about 300 inmates in a jail designed for 150. The group recommended it should be closed at “the earliest possible opportunity” and replaced with a new prison at Kilworth.
This prison would have 200 cells, capable of accommodating up to 350 inmates.
The group also recommends that Thornton should have 20 step-down facilities, which could cater for 200 prisoners.
Kilworth would have 15 step-down facilities, housing up to 150 inmates.
But the report said the overcrowding problem could not be solved by building more prisons and so it recommended alternatives to custody.
These include earned temporary release for suitable inmates to encourage them into rehabilitation prior to release.
The group also suggests home detention, where offenders are confined to their homes for periods under supervision, possibly involving electronic tagging.
Another proposal is periodic imprisonment, where convicts are jailed for certain days of the week.
The Irish Penal Reform Trust (IPRT) said the document marked a “dramatic shift” in official thinking.
IPRT director Liam Herrick said: “The broad thrust of the review group report is positive in that we see a clear recognition of some key principles — the importance of meeting basic human rights standards, the need to reduce the prison population, and the need to create incentivised regimes where prisoners can aspire to progress to open facilities if they engage with rehabilitation, treatment and education.
“The clear recommendations in the report that overcrowding and the intolerable conditions at Cork and Mountjoy need to be addressed as quickly as possible are hugely significant.”
Cork East TD Tom Barry welcomed the plans and said a new prison at Kilworth would provide a “huge economic boost” to the area.
Cork South Central TD Jerry Buttimer welcomed the Government’s backing, in principle, of the recommendation to close Cork Prison and build Kilworth.