The Ministry of Justice says the security firm G4S has lost its contract to run the Wolds Prison in East Yorkshire.
G4S, which has been at the centre of the Olympics security shambles, also failed to win any further prison contracts it was bidding for.
Competitions to run Northumberland prison and the South Yorkshire group of jails - Lindholme, Hatfield and Moorland - will now move to the final stage, with contracts likely to be awarded next spring, the MoJ added.
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