The UK is to spend £25m on building a prison in Jamaica so that foreign criminals in the UK can be sent home to serve sentences in the Caribbean.
More than 600 Jamaican nationals are in UK jails but cannot be deported because of Jamaica's poor prison conditions.
Prime Minister David Cameron announced the deal as he began a visit there.
However, calls from Jamaican MPs and campaigners for Britain to pay reparations for its role in the slave trade threaten to overshadow his trip.
Jamaican Prime Minister Portia Simpson-Miller said she had raised the issue in talks, but Mr Cameron told reporters that financial reparations were "not the right approach".
The announcement of UK funding for a Jamaican prison aims to break a deadlock in negotiations over a prisoner transfer deal between the two countries.
Officials say the foreign aid-funded deal could save UK taxpayers £10m a year when transfers begin in 2020.More than 300 existing offenders are expected to be sent back under the Jamaica prison scheme, which covers those sentenced to at least four years who have 18 months or more left to serve in custody.
Currently they cannot be sent to Jamaica because of fears that jail conditions in the country would allow a successful challenge under human rights law.
Jamaica is third highest in the list of foreign countries with nationals serving prison sentences in the UK.
Almost 70% of the Jamaicans in prison in Britain are serving sentences for violence and drug offences.
The UK is contributing about 40% of the cost of building the planned jail, which would hold 1,500 people.
Mr Cameron, who had been at the United Nations in New York for talks on the fight against the Islamic State group, said: "It is absolutely right that foreign criminals who break our laws are properly punished but this shouldn't be at the expense of the hard-working British taxpayer," he said.
"That's why this agreement is so important. It will mean Jamaican criminals are sent back home to serve their sentences, saving the British taxpayer millions of pounds but still ensuring justice is done.
"And it will help Jamaica by helping to provide a new prison, strengthening their criminal justice system."
Mr Cameron, the first British prime minister to visit the island in 14 years, is also set to announce £300m of aid funding on infrastructure projects across the Caribbean, including roads, bridges and ports.
He said the regional infrastructure fund, which will be delivered in collaboration with the Caribbean Development Bank, would help support economic growth in the Caribbean.
Jamaica's national security minister Peter Bunting welcomed the new investment and told Mr Cameron the quality of the country's ageing prisons "has really been a sore point for us".
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