The Government has approved plans to increase prison capacity on existing prison sites by approximately 1800 beds, Corrections Minister Judith Collins says.
The extra 1800 places are expected to cost around $1 billion.
It's because the proportion of offenders charged with serious crimes has risen, meaning more people are being remanded in custody and serving more of their sentences in prison.
"We have to respond through new investment or we will create unacceptable safety risks for staff, prisoners and the public, and be less effective at rehabilitating prisoners," Ms Collins says.
Ministers will next month consider the business case for a new 1500 bed facility at the existing Waikeria prison in the Waikato. If the facility is approved it will receive its first prisoners in 2020.
The Government has proposed an increase in double bunking at the Northland Region Corrections facility and expects this will add 80 beds by 2017, and a new accommodation block at Mt Eden Corrections Facility is expected to add 245 beds by 2019.
Corrections will also propose increasing the delivery of rehabilitation programmes including Drug Treatment Units, reintegration programmes, education and training programmes and Special Treatment Units to help address violent and sexual offending.