As part of a $123.5 million budget announcement on Friday, Attorney-General Chansey Paech committed to three new adult prisons in Alice Springs and Darwin.
More than a decade after Berrimah Jail, currently known as Don Dale Youth Detention Centre, was decommissioned, Mr Paech said the facility will become a 100-plus bed training centre and adult prison.
In coming months, children will be moved from Don Dale to a new youth detention facility next to the adult prison in Darwin's northern suburb of Holtze.
The corrections department hopes to create up to an additional 150 beds but is still waiting to see the condition of the facility following a riot by 16 young people last month.
Attorney-General Chansey Paech has outlined plans for three new prisons. (Neve Brissenden/AAP PHOTOS)
Mr Paech said two existing alcohol rehabilitation facilities - Paperbark in Alice Springs and Stringybark in Darwin - will be converted into "therapeutic" women's prisons with up to 140 beds across the sites.
Women are currently held within sections of prisons dominated by men in Alice Springs and Darwin.
Corrections Commissioner Matthew Varley told reporters it was the largest infrastructure expansion in Territory jails over the past decade.
"It is the next generation of facilities; we'll go from four correctional facilities in the NT to seven," the commissioner said.
Mr Paech said he was confident the alcohol and rehabilitation services would continue but couldn't provide any further details.
Families who have been calling for therapeutic services are outraged.
Nyikina and Jabirra Jabirra woman Natalie Hunter, founder of the Northern Australian Aboriginal Justice Agency, said the Territory needed services, not jails.
"When are they going to listen to our black voices instead of blocking them out?," she said.
"It has been decades of neglect, of not properly implementing recommendations from report after report."
Tiwi woman Yvonne, who asked not to publish her last name, said the women's prisons looked like dorm style accommodation.
"It's like the mission days where my mother grew up ... all clumped together," she said.
"It's not culturally right.
"You are putting women back through the stolen generation, taking their babies away and locking them up in places like that. Give us some dignity."
Justice Reform Initiative executive director Mindy Sotiri said it was an "expensive step in the wrong direction".
The expansion will take prison bed numbers to almost 2500 in the Northern Territory for a population of just under a quarter of million.
Comparatively, the NT has just 41 public mental health beds.
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