The Government has abandoned plans for a mega-prison in the Waikato, but has not yet revealed its back-up plan.
The Corrections Department has sought approval to upgrade Waikeria Prison near Te Awamutu to 3000 beds, but Cabinet has repeatedly delayed a decision on it.
Corrections Minister Kelvin Davis said today that it would not be approving Corrections' proposal.
The decision not to proceed with the expansion did not solve the problems of a rising prison population and low prison capacity, he said.
Davis said he would be working with Minister of Justice Andrew Little and Police Minister Stuart Nash to come up with solutions.