The head of the Parole Board says a growing number of inmates are having their release dates pushed back because of a lack of safe places for them to go.
Judge David Carruthers says the sort of prisoners likely to be affected are those serving sentences of preventive detention.
He says about 240 people are currently serving preventive detention sentences: a lot of them are child sex offenders and often have a history of crime.
Judge Carruthers says the situation is costing taxpayers a lot of money, but the safety of the community must come first.
A halfway house, where long term prisoners get round the clock support, is planned for Wellington in three years.
Judge Carruthers says evidence from Canada and Britain show halfway houses can help reduce re-offending.
The Corrections Department says a lack of partnership with the community is leading to the shortage of half-way houses or intiatives for prisoners on release.
Rehabilitation general manager Phil McCarthy says there are a number of intiatives to help prisoners who've served their term re-adjust back into society.
But he says there is still notion that prisoners should not be released and this needs to change.
Prison Fellowship New Zealand says prisons could be full of sex offenders if half-way houses are not found for them.
National director Robin Gunston, says this is especially a problem for child sex offenders.
He says it's challenging to find a half-way house for them because there are restrictions such as being a certain distance from a school, playground or other places where children congregate.