The government has approved the building of a new 1,700 capacity prison in Leicestershire, overturning the decision of local planners.
Harborough District Council previously rejected a Ministry of Justice (MoJ) application for the jail near the existing HMP Gartree.
However, it has been told its refusal has been overturned on appeal by Communities Secretary Michael Gove.
The council said it was "deeply disappointed" by the news.
It had rejected the scheme on the grounds the plan was "ill-thought out", unsustainable and would harm the countryside.
The MoJ argued the new Category B jail was needed to cope with increasing inmate numbers.
A spokesman said: "Today's decision at Gartree is critical to delivering the 20,000 extra places we need to keep dangerous offenders off the streets and will boost the local economy by creating hundreds of new jobs."
But Liberal Democrat council leader Phil Knowles said: "The community have real and justified fears for the infrastructure's ability to cope.
"I still maintain my view that this is the wrong place to build this."
He called on the government to provide "huge investment into the community and the infrastructure to help offset some of the negative impact".
Mr Knowles said he would seek a meeting to discuss the reasons for the appeal's success.
More than 2,000 people signed a petition against the new prison, with opponents including the MP for Harborough, Conservative Neil O'Brien.
He said: "I think this is the wrong place to put this prison, and there would be many better sites.
"Having done everything I can to stop this, the only thing I can see that might now stop this would be for the council to launch a judicial review of this decision."
The Department for Levelling Up, Housing and Communities confirmed planning permission had now been granted for the jail near Lubenham, but declined to comment further.