Corrections said it will no longer use handcuffs on women who are past 30 weeks pregnant, or during labour, or while prisoners are in hospital after giving birth.
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The department's chief executive, Jeremy Lightfoot, said its previous policy - highlighted in a recent report by the Children's Commissioner - was not "fit for purpose" and did not make allowance for the added stress expectant mothers might experience.
Lightfoot said officers will instead use "risk assessment processes" to ensure the safety of everyone involved.
Staff will also be required to be outside an examination or birthing room when an expectant mother is having an appointment or is in labour.
Two separate reports by the Office of the Children's Commissioner into the Mothers with Babies Unit (MBU) in prisons have found multiple incidents where women were handcuffed before, during and after giving birth.
A 2019 report into the MBU in Auckland found female prisoners were handcuffed in labour or soon after birth in hospital.
A 2020 report into a Christchurch unit found handcuffing shortly after giving birth and while in the late stages of pregnancy.
It is illegal for female prisoners who are giving birth to be restrained, and Corrections' policy states that where a medical professional says a woman is in labour, restraints must be removed.
The 2019 report found guidance was unclear, as there were varying interpretations of when prisoners were to be treated as pregnant, and when they were giving birth.
The report said it was "completely unacceptable" and expected the practice would be "discontinued".