Private security firms G4S and Serco have been stripped of responsibility for tagging criminals in the UK.
It follows allegations they charged the government for tagging people who were either dead or in jail.
The monitoring contracts will instead be handed to Capita by the end of the financial year, Justice Secretary Chris Grayling said.
He said the rival firm would continue to use Serco and G4S’s equipment.
Capita is bidding to take on the contracts permanently.
“Under these arrangements, Capita will be using the systems and equipment of G4S and Serco,” Mr Gralying said.
“But the two companies will no longer have a direct role in delivering the service on the ground.”
He added: “This signals a fresh start for electronic monitoring that brings us a step closer to introducing the most advanced tagging system in the world.”
Ashley Almanza, chief executive of G4S told a committee of MPs last month his company had failed to “tell the difference between right and wrong” when dealing with the contracts.
Serco chairman Alistair Lyons said it was “ethically wrong” to overcharge the government.
Prison reform campaigners the Howard League said it was “surreal” ministers were still allowing private companies to bid for security contracts.
“Tagging is a small part of a bigger picture of private security corporations being far better at winning contracts than keeping the public safe, with increased crime resulting in increased profits,” director of campaigns Andrew Neilson said.
From prisons to the probation service, the Ministry of Justice’s dangerous experiments with privatisation should end.”
In summer, the MoJ revealed that the private security firms had overcharged the government by “tens of millions of pounds”. The figure emerged following an audit by accountants PricewaterhouseCoopers.
It found that overcharging began at least as early as 2005 when the current contracts began.
The Serious Fraud Office has launched an investigation and both firms have said they are “co-operating fully”.