The prison officers' union supports a Corrections Department plan to house inmates in shipping containers.
The department is considering converting containers to solve an expected shortage of prison beds.
Corrections Association president Beven Hanlon says a prison bed crisis is imminent and shipping container cells are a much better solution than plans to "double-bunk" prisoners.
But the president of the Howard League for Penal Reform, Peter Williams, QC, says housing prisoners in shipping containers is a Third World tactic.
Kim Workman, former head of prisons who now leads the group Rethinking Crime and Punishment, says the option is inhumane and was discarded by the department 20 years ago.
Mr Workman says the idea was rejected because prisoners must be given humane accommodation to have any chance of rehabilitation.
Under the option being considered by Corrections Minister Judith Collins and the department, prisoners could be asked to build the cells themselves.
Ms Collins says she is working with the department on ways to deal with the growing prison population.
By February, New Zealand's prisons will be full, and using shipping containers would be at least 50% cheaper than building conventional new prisons, she says.
"We're looking at all options in relation to modular units, pre-fabricated units. Some of them could well be shipping containers. We've got two that have been brought in for us to look at, and that is clearly one of the options."
Ms Collins says it is possible that prisoners will be asked to build the cells from the shipping containers, which would give inmates with building and construction skills an opportunity to use them.
She says the units could provide prisoners with better living conditions than those at some existing prisons.
The department's assistant general manager of systems and infrastructure, Derek Lyons, says cost, durability and security are critical questions.
Mr Lyons says it is also considering traditional concrete construction of extra cells and hopes to make a decision later in the year.