This is the first time Lauder has been involved in prison education, which it will deliver in Edinburgh, Perth, Glenochil and Cornton Vale jails.
Lauder said it could not divulge the value of the deal, beyond describing it as a "multi-million pound contract," because the Scottish Prison Service had bound it to confidentiality. The total spent on prisoner education in Scotland is thought to be around pound;3.5million.
The two colleges will now be at the forefront of the drive to lower re-offending rates among prisoners, estimated to cost the UK taxpayer pound;11 billion. The development of learning and skills is seen as making a key contribution to cutting down on re-offending.
Janet Lowe, principal of Lauder college, said prisoners could benefit from education, particularly if they gained the core skills needed for employment, specifically literacy and numeracy.
Gary Waddell, learning and skills adviser to the Scottish Prison Service, suggested "huge progress" had already been made in the provision of learning in prisons, and the colleges' contribution would reinforce that.
Despite the optimism, however, a committee of MPs at Westminster reported at the end of last month that half of the inmates in English jails lacked the skills needed for 96 per cent of jobs available on their release.
Only a third had access to formal education, lasting on average nine hours a week, the Commons education select committee stated. It also revealed that just 31 out of 75,000 prisoners had access to the internet for learning purposes. And more than half of male prisoners had no qualifications.
Barry Sheerman, the Labour backbencher who chairs the committee, said:
"Although the Government has increased resources for prison education, it has not fully met its manifesto commitment to 'dramatically increase the quality and quantity of education provision.' " He added: "If prisoners are to find a real alternative to crime on their release, then prisons will have to dramatically improve their provision.
Prisoners need high-quality teaching that is suited to their individual needs."
The MPs found that prison officers gave a low priority to education and that inmates were paid more to do "repetitive work in workshops" than for joining learning programmes.
Steve Taylor, director of the Forum on Prisoner Education in England and Wales, criticised "the unremitting diet of basic skills" for prisoner education, which was not based on any real measure of individual need.
Mr Taylor told The TESS that his impression is that the position was worse in Scotland, largely because of fewer resources. The total budget for prisoner education in Scotland could be spent on one prison in England. He also suggested the political will to make prisoner education a priority was not so strong in Scotland.