Up to 28 extremist prisoners will be placed in separate units in a drive to tackle radicalisation behind bars.
Inmates suspected of planning terrorism or posing a risk to national security face being moved to three newly created specialist centres under an amendment to prison rules.
Those who spread views that might incite others to commit terrorist offences, or anyone whose views are being used in a way which undermines good order and security in jails, could also be shifted to one of the facilities.
The first centre will be up and running at HMP Frankland in Durham within weeks. A further two units will follow at other high-security establishments.
Prisons Minister Sam Gyimah said: "Any form of extremism must be defeated wherever it is found, and it is right that we separate those who pose the greatest risk in order to limit their influence over other prisoners.
"These centres are a crucial part of our wider strategy to help tackle extremism in prisons and ensure the safety and security of both our prisons and the wider public."
Moves to establish specialist units first gathered pace last year after a review warned that Islamist extremism is a growing problem within jails.
The assessment found evidence of offenders advocating support for Islamic State and "charismatic" prisoners acting as "self-styled emirs" to radicalise other inmates.
It also suggested that "cultural sensitivity" among staff towards Muslim prisoners could "inhibit the effective confrontation of extremist views".
Figures indicate authorities are managing more than 1,000 inmates who have been identified as extremist or vulnerable to extremism at any one time.
The new centres will be used to target all forms of extremism in jails, including Islamist and extreme far-right ideologies.
A prisoner will be considered to be moved to one of the units if their behaviour meets one of the criteria included in the new prison rules and the level of risk they present can only be managed through separation, the Ministry of Justice said.
Once in a centre, they will be reviewed by experts every three months and will only be returned to the general population if the threat they pose has reduced sufficiently.
The new "jails within jails" will be completely separate from the main wings of the three establishments where they are located, and they will be staffed by personnel from the existing high-security estate.
Decisions on which prisoners are placed in the units will be taken by specialist senior staff.
It is understood that the first group prisoners earmarked to be separated from the mainstream population is yet to be identified.
Convicts serving sentences for non-terror related offences could also be moved to the centres if they show signs of serious extremism behind bars.
Earlier this month the government launched a 100-strong team of counter-terrorism experts to tackle "poisonous" extremism in jails.
Other measures include a ban on extremist literature in prisons and the removal of anyone from communal worship who promotes dangerous views.