The government will invite tenders this year and hand over the site for development into an arts and leisure facility, to be completed in phases from next year.

Last month, the South China Morning Post revealed a plan by five philanthropist families, led by the Hotungs, to turn the site into a massive arts complex operated by a charitable foundation with $500 million earmarked as the sum required for restoration. One family has donated $100 million.

Mr Lau retired last year after working his way from a junior guard at the Victoria Prison to a principal officer at the Correctional Services Department in a career spanning 33 years. He is now a volunteer guide at the Hong Kong Correctional Services Museum in Stanley.

He also worked in Chi Ma Wan Correctional Institution, Stanley Prison, Siu Lam Psychiatric Centre and Lai Chi Kok Reception Centre.

Mr Lau said the 480-square-metre museum in Stanley, which opened two years ago and showcases 600 artefacts, provided only a limited space and could only tell part of the story of Hong Kong's prisons.

'The opening of the museum was a sign that the government was beginning to lift the mask of its penal system,' Mr Lau said.

'However, I don't think the location and scale of the current museum was sufficient for us to exhibit the progress of correctional services over a century.

'The 163-year-old Victoria Prison provides the best setting for such role, with cells and an underground tunnel used to lock up debtors and transfer prisoners between the police station and prison still intact,' said Mr Lau, who worked there for more than a year.

The prison, built in 1841, has a colourful history, with the co-existence of European, Chinese, Indian, and Pakistani staff in its early history, he added.

In the early days, prisoners sentenced to death were reportedly hung outside the building, which was used by occupying Japanese forces as an interrogation centre during the second world war.

Mr Lau's proposal was underlined by the urge to correct the many misconceptions held by local and foreign visitors to the Stanley museum.

'I was often asked if there were frequent gang fights in jail or if inmates could be so powerful as to use derogatory words to call us,' Mr Lau said.

'Some visitors also thought there were all sorts of cruelties exercised in the cells. I told them these details were only confined to movies.'

Mr Lau said he would like to see Victoria Prison transformed into a world-class museum with exhibitions that contrasted the old and the new penal systems.

He said the historic exhibition would include artefacts and video programmes, but the government must first enlist the help of donors and historians.

Mr Lau said visitors were usually attracted to the mock execution chamber, flogging stand, the 'wind-till-you-whine' crank (a British-designed turnstile that can permanently wear down prisoners' shoulder joints and tendons if repeatedly used), and the cat-o'-nine-tails, a whip which tears the skin of people it is used on.

Museum visitors increasingly have shown an interest in how much the prison environment had changed, he said.

'Decades ago, prisoners slept on the floor, smelling each other's feet in a crowded cell. They were flogged for misbehaving and received only rice and water for the first 10 days of each month.'

'But now, the Correctional Services Department has shifted the focus to rehabilitation. There is counselling, drug rehabilitation, medical services in a prison and inmates have four meals a day.

'Our ultimate aim is to help inmates re-settle in the society in a healthy way and we want taxpayers to see their money is not put to waste,' Mr Lau said.