The Corrections Department says more than 2,000 extra prison beds will be needed in the next eight years, if the rate of imprisonment continues to grow at its present rate.
The figures are part of a briefing to Corrections Minister Judith Collins.
But Ms Collins says she does not believe four more prisons will be needed in that time.
She says the Government has promised to build an extra prison in the next three years, and some existing prisons are being re-developed and other measures will try to keep inmates out of prison after their release.
Ms Collins says the Government will also make more use of double bunks in cells to cope with an increase in the prison numbers.
The department says the prison population is forecast to grow from 8,000 inmates to 10,700 by 2016.
It says the current prison capacity could be exhausted by 2010, meaning about four new prisons would be needed in the next eight years.
Last week, the Government passed a change to the Bail Act, making it more difficult for remand prisoners to be granted bail.