The Department of Corrections is planning to expand a unit at Rimutaka Prison for older prisoners.
The high dependency unit at the jail north of Wellington opened a year ago and at present can accommodate take 20 prisoners, some with dementia, who struggle with daily tasks.
Department documents reveal plans to renovate a similar building on the Rimutaka Prison grounds to add a further 10 beds, which could be refurbished by about March next year.
The plan included other projects at Rimutaka Prison and the department said it was subject to financial approval, which was expected early next year.
The high dependency unit opened last December and costs about $400,000 a year to operate.
But Rethinking Crime and Punishment spokesperson Kim Workman said community facilities for older inmates should be considered as an alternative to prison, and that some inmates would be better cared for in a community facility with specialist treatment.
"We don't necessarily want to see people with acute psychotic disorders in prison. We should see them in a psychiatric facility within the community," Mr Workman said.
"We don't want to see elderly prisoners who are there not because they are a risk but because they don't have any community support."
A community facility would also be a lot cheaper to operate, he said.