Plans to construct a new prison in North Wales have been withdrawn.
The former Dynamex site in Caernarfon had been tipped for purchase in February by the then prisons minister David Hanson.
Up to 1,000 jobs from the 800-capacity prison could have been provided by development on the 27-acre site, chosen from among four Welsh sites after a four-month consultation period.
Mr Hanson had earlier said the deal was “subject to financial checks”.
But the new prisons minister Maria Eagle said the Dynamex deal did not provide the “best value for the taxpayer”.
She said: “After careful consideration, the Ministry of Justice has decided to withdraw its interest in acquiring the former Dynamex site near Caernarfon in North Wales. We have a responsibility to ensure we get best value for the taxpayer.
“We were aware of potential issues with this site, and our due diligence procedures established that it is not suitable for prison development.”
She added that potential new sites would be identified in Wales with a new open and consultative search process in collaboration with the Wales Office, Welsh Assembly Government and others.
The move did not affect plans to sell the former police training college site at Cwmbran, she said, adding that their commitment to provide 96,000 prison places by 2014 had not been not affected either.
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