The prison officers union and says it is "only a matter of time" before overcrowding causes a riot.
The Corrections Association is taking legal action to force the Government to reduce inmate numbers at some prisons.
It claims the Corrections Department is breaching the law and says the safety of its members and the public is being put at risk.
Association national president Bevan Hanlon said the union understands management at Auckland's Mount Eden prison were instructed not to officially record numbers of inmates being admitted.
"The site manager put an instruction out to staff not to record daily musters," he said.
"The reason for that is that the department are claiming they haven't gone over musters because at the end of the day, when they lock inmates up, they haven't gone over (the maximum capacity) 421 inmates."
However, the union believes inmate numbers at Mt Eden breached capacity by about 21 inmates a day, Mr Hanlon said.
The association has taken its case to the Employment Relations Authority on behalf of Mt Eden officers and any decision would set a precedent for all prisons.
It is not the first time the union has sought a compliance order to reduce inmate numbers from the court. In 1992 it also launched legal action on behalf of Mount Eden Prison and for Manawatu Prison in 1992.
Corrections Department public prisons general manager Phil McCarthy said today the department was working with police and the Ministry of Justice to manage increased prisoner numbers.
"We are continuing to work with these agencies to manage prisoner numbers, using police and court cells to accommodate prisoners who cannot be accommodated in the local prison," he said.
The department did not believe prisons were exceeding muster numbers and breaching the Corrections Act.
"In some areas, prisoners are being accommodated in court cells overnight and returned to the prison during the day to shower and use the exercise yards," he said in a statement.
"At the same time, prisoners are going from prison to the courts for scheduled court appearances. In both instances, these prisoners are not counted as part of the muster because they are not occupying beds."
The need to use police and court cells would reduce from October when an additional 300 prison beds would be available, Mr McCarthy said.
Government funding of $125 million approved late last year had already resulted in the construction of 40 beds in April and a final 150 beds would be completed in April 2006, he said.
- NZPA
Prison overcrowding will cause riot, says union
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