An unprecedented push to overhaul Canberra's prison system will not be aimed at expanding the ACT's crowded jail, but in keeping people out of jail altogether, the ACT Government says.

Key points: A proposed expansion of Canberra's jail was discarded after it was costed at $200 million

A proposed expansion of Canberra's jail was discarded after it was costed at $200 million A new facility will be built to help inmates transition back into society

A new facility will be built to help inmates transition back into society Community programs aimed at reducing crime will receive more funding

The Alexander Maconochie Centre has faced capacity and overcrowding struggles in the past, and is expected to run out of space if action is not taken.

But future expansions of the high-security main complex at the AMC are now off the table, in favour of spending money on bail programs, prisoner support and support for victims of crime.

The ACT Government will construct a minimum security "reintegration centre" with capacity for roughly 80 people, bringing the operating capacity of the full prison to almost 600.

ACT Corrections Minister Shane Rattenbury at the Alexander Maconochie Centre. ( ABC News: Alkira Reinfrank )

Recent data from the annual Return on Government Services report shows the ACT's incarceration rate has increased year on year for the past 10 years, but Corrections Minister Shane Rattenbury said he was confident new initiatives would reduce demand at the prison.

Instead of spending the requisite $200 million on an expansion of the ACT's only correctional facility, they will aim to prevent crime through community programs in what Mr Rattenbury said was an Australian first.

"We have confidence that the combination of investing in a reintegration centre focused on bringing people back into the community in a crime-free way, and the justice reinvestment program will give us the capability to not only invest our money in a smarter way, but defer the need for a significant expansion of the AMC," Mr Rattenbury said.

The policy shift is grounded in the principles of justice reinvestment, which favours redirecting $14.5 million away from prisons and into community programs.

A new project called 'Building Communities Not Prisons' will be launched, aimed at preventing crime by working to "improve the lives of individuals and their families", Mr Rattenbury said.

A further $997,000 will be invested in the design of the Reintegration Centre.

Because one in five detainees in the ACT reported saying they had unstable accommodation, courts often chose not to grant conditional liberty on bail or parole, the minister said.

The plan is for the BCNP program and the new centre to address this issue by offering "short-term, culturally sensitive, transitional accommodation and longer-term supported accommodation."

"Justice Reinvestment is honest about the reality of incarceration in Australia," Mr Rattenbury said.

"While crime rates are going down, incarceration rates are going up. The most just justice system is a system that acts early to help prevent the kinds of circumstances that can lead to crime in the first place."

Successful community programs a blueprint for the future

The jail currently houses more than 500 inmates. ( ABC News: Alkira Reinfrank )

To support the shift, Mr Rattenbury pointed to a range of smaller justice reinvestment programs he said were successful in reducing crime.

The Strong Connected Neighbourhoods had reduced violent crime by 50 per cent and property crime by 60 per cent, he said, and would be expanded as part of the new strategy.

This success was down to the fact that the program aimed to increase "social cohesion among high and complex-need residents," Mr Rattenbury said.

It also benefited ACT police by reducing costs equivalent to $0.50 for every $1 invested, an independent evaluation found.

Also benefiting from the redirected funds was the Yarrabi Bamirr program, Mr Rattenbury said, which would receive an additional $3.6 million.

Operated by Aboriginal and Torres Strait Islander-run organisations, the program aims to keep families together, prevent homelessness and reduce incarceration.

"In continuing Yarrabi Bamirr, the Government reaffirms our commitment to working with Aboriginal and Torres Strait Islander communities to deliver programs that respond to the needs of communities by being inclusive, family-focused and culturally appropriate," Mr Rattenbury said.

Opposition expresses concerns about capacity

Opposition corrections spokeswoman Giulia Jones said while her party broadly supported the notion of justice reinvestment, she held concerns over prison capacity.

She said 80 new beds at the reintegration centre would help to ease population pressures, but that buffer moves to buy space in the prison were not acceptable solutions.

"What happens if we hit up against capacity in the meantime and I don't think the Canberra community will be that excited about trundle beds being used?" she said.

She also questioned whether female prisoners would be accommodated in the new centre.

"I think if we are able to house women in a section of the men's prison like we are at the moment, there's no reason why a building like this couldn't house a population of women depending obviously on design," she said.