A proposal for a men's prison in Wiri, south of Auckland, has been approved by a Board of Inquiry.
Following a hearing in May, the Environmental Protection Authority has issued the decision on an application by the Department of Corrections for a 1000-bed prison.
Plans for the prison were criticised by community groups, which believe that many young people living in Wiri could be influenced by a prison culture.
The prison will be the third Corrections facility there.
Environment Minister Nick Smith directed the application for the prison to a Board of Inquiry as it was considered a proposal of national significance.