A top criminal justice official says it would be a "disaster" for north Wales unless a prison is built in the area.
The new facility in north Wales would house up to 500 prisoners
Clare Pillman, the Criminal Justice Board chair, says 700 inmates from the region are housed at English prisons.
Flintshire Council has supported calls for a regional prison, but said there were no suitable sites in the county.
The Firestone factory in Wrexham, the Friction Dynamics plant in Caernarfon, and the former Shell site at Rhosgoch on Anglesey are also being considered.
In June, the Welsh affairs committee proposed that a new prison for up to 500 people should be built in north Wales, helping to ease overcrowding in prisons over the border in England and allowing inmates to serve their sentences close to home.
In response the UK government said it was still in the process of reviewing the demand for prison places across north Wales as part of a UK-wide review.
The Ministry of Justice said it was sympathetic to the issue and also noted that in August no site had been identified as a viable location.
In the meantime, the North Wales Criminal Justice Board has written to local councils to ask for their views on potential sites.
The board's chair Clare Pillman said: "I think we in the justice sector in north Wales have felt the argument for a prison in north Wales is so self evidently right for a very long time that it is very very good to see some real movement on it at the moment.
"I think it would be a real disaster if we were still looking at a situation in north Wales where 100% of prisoners from north Wales were housed in prisons in England."
Adding her voice to calls for a new prison, Wrexham AM Lesley Griffiths highlighted the travel costs involved.
Mrs Griffiths said: "One thing is for sure, the situation cannot continue where North Walian prisoners are shuttled back and forth from England over many miles, for court appearances across the region - sometimes only lasting a couple of minutes on each occasion.
"The cost to the tax payer in continuing to do this, is immense."
Councillors in Flintshire have welcomed proposals for a new prison in north Wales but said there were no suitable sites in the county.
They rejected suggestions that the former RAF Sealand camp could be used, claiming the site forms part of the Northern Gateway development either side of the A550 at Deeside.
There are five prisons in Wales, but all are in the south
Councillors - who pledged to continue working with the regional partnership board to identify a site - said a prison at Sealand would do little to reduce travelling times for people in north-west Wales, or to promote the use of the Welsh language.
Another site under consideration is the former Firestone rubber factory on Wrexham's industrial estate.
Raymond Squires, a community councillor for nearby Pentre Maelor, said: "They had protests here years ago when it was Deeside Aluminium. The road was completely blocked here.
"People were laying on the road and they had wheelchairs on the road. If they want the same protests again they will certainly get them, because this is not a dumping ground for a prison."
A decision is expected to be made later in November.
There are currently five prisons in Wales, but all in the south - Cardiff, Swansea, Parc in Bridgend, Usk and Prescoed in Pontypool.