The fellow inmate, who has name suppression and was called Witness X in the High Court at Wellington today, said he and Lundy were in the prison's segregation unit at the same time.
Witness X said he had been in the unit for a few days when he and Lundy started chatting over a game of cards about why they were in prison.
He said Lundy had been speaking about an appeal.
"I said I wouldn't be here if my mother hadn't called the police and told them who I was," Witness X said.
"He said he wouldn't be there if his daughter hadn't come out and seen what he had done to his wife."
Lundy told the man he had planned the crime for a while, he said.
Witness X also said Lundy told him "she had it coming to her".
In 2013, Witness X was watching television and saw Lundy had been released on bail and a new trial had been ordered.
He tried calling police, but rang the traffic line *555 - however, he hung up when the operator could not put him through to police.
In March 2014, after another jail stint, the man went to a police station and gave a statement about the conversation he and Lundy had.
He had not received anything to give evidence today, he told the court.
He was also not expecting a reward in the future, but came forward because "it was the right thing to do".
During the man's evidence, Lundy wrote notes that were passed to his lawyers.
Under cross examination, defence lawyer Ross Burns told the man that Lundy was convicted after the pair had the conversation and therefore had not been convicted at the time, so he could not have been talking about an appeal.
But the man said that couldn't have been right.
Mr Burns also questioned the man about a letter he had written to a judge while he was in prison on another occasion requesting bail in exchange for information about Lundy.
But Witness X said that letter was never sent because his lawyer suggested he would not be seen as a credible witness if he sent the letter.
Detective Senior Sergeant Warren Olsson told the court he had interviewed the man in relation to the case and confirmed he would not be given any money or compensation for his evidence.
But he said they would ensure his name would be suppressed in court.
The trial in front of Justice Simon France continues.