Corrections Minister Judith Collins says the practice of double bunking is essential now the Government is facing an urgent shortage of prison beds.
Ms Collins says the number of inmates in jail or police station cells on Monday reached 8,434, just 23 fewer than the previous high recorded in 2007.
Ms Collins says in the short term, demand will be met by double-bunking and the use of pre-fabricated or shipping-container cells.
Options for the medium term and long term include extending existing prisons and building a new prison, most likely in Wiri, South Auckland.
Ms Collins says more people will soon be behind bars than at any other time in New Zealand's history, but the Corrections Association is refusing to agree to the double bunking unless its members get a pay rise.
The association, which represents prison guards, says the Government is using high numbers of inmates as an excuse to push through its double bunking policy, without consideration for staff safety.
It says officers are being told to accept double bunking or face redundancy.
The union says beds will not run out for another 12 months, which is enough time for the Government to consider safety measures.