The government has ruled out building a mega-prison at Waikeria, in south Waikato, but the prison inspectorate has found the current facility's high-security wing is not fit for purpose.
A boost in funding for New Zealand's prison inspectorate has led to 13 jail inspections taking place in the past year.
Corrections' chief prison inspector Janis Adair said the inspections highlighted a range of issues including overcrowding, and at-risk prisoners being kept in their cells 22 hours a day as well as an increase in double-bunking, including in units where that was never envisaged as a possibility.
"It's over 100 years old. It's very challenging for staff to actually supervise prisoners and the physical environment in the high security cells was not conducive to the humane treatment of prisoners, safety, rehabilitation or good order," Ms Adair said.
The inspectorate's report also found some of Waikeria's cells had limited light and airflow, and in some cases toilets had no lid in cells where meals were eaten.
She said some prisoners who were suicidal spoke of being held for 22 hours a day in their cells, which exacerbated their feeling of being hopeless and unwell.
However, she said the trial of a new type of at-risk unit may provide an alternative for those prisoners.
The beefed up prison inspectorate now has 28 staff and will carry out another five prison inspections before the end of the year.
The inspectors speak to prison staff, inmates, local iwi and anyone else who wanted to talk about conditions on the inside of jails, Ms Adair said.
"In my experience prisoners take every opportunity they can to share their experiences with us," Ms Adair said.
"We have a constructive relationship with staff which ensures we have an open dialogue so we can truly understand what the pressures are for staff in these complex and difficult situations."
She said the biggest challenge for Corrections was the increasing prison population, which caused more problems than just the increase in double-bunking.
"It's also led to longer lockdown hours for prisoners. It also means that in terms of rehabilitation and reintegration there is a significant challenge in prisoners getting access to courses and programmes, which will assist their rehabilitation."
Ms Adair said pop-up cells could possibly provide an answer.
"What we have to do is ... ensure staff have every possible training in order to give them insights into the fair, safe and humane treatment we must have for our prisoners.
"We need to find and design new ways of making every opportunity work for prisoners to ensure that from the day they're incarcerated ... there is every plan to ensure their reintegration back to their families and communities."
She said aging prisoners also needed suitable accommodation in prison and the inspectorate team would be doing some work around that next year.