Laws that deal with serious violent and sexual criminals who are at high risk of reoffending need "significant reform", says the Law Commission.
It is calling for feedback on its proposal to repeal and replace the current laws which enable indefinite supervision and detention of those offenders, and replace it with a single new Act.
The proposed new legislation would still allow for detention and supervision, but instead be focused on rehabilitation and reintegration, the Commission said.
The current laws have been criticised by New Zealand courts and international bodies for their inconsistency with human rights law, it said.
"The current approach of keeping people in prison indefinitely raises human rights issues. It keeps them in permanent punishment," said principal adviser John-Luke Day.
The proposed law would still keep the community safe, while recognising that "containing and incapacitating dangerous individuals" was not good law, he said.
The proposal paper showed preventative measures would include community and residential supervision, and secure detention.
But the Commission wanted to ensure compliance with the Bill of Rights Act and ensure those measures "impair rights to the least extent possible while also providing an overall response to addressing risks to community safety".
The current law was hard to navigate because it was spread across different statutes, said Day.
"Those statutes don't connect as best they could, making it difficult for the courts to impose the right restrictions on people."
The three preventative measures are instead proposed to fall under a "single statutory regime", meaning the Courts can apply the least restrictive measure necessary.
The Commission's proposal is open for public submissions until 20 September.