Reports on how mentally ill people are being treated in prisons, are being held up as another red flag that a review of the entire mental health system is needed.

The Government is beefing up the powers of the prison inspectorate, following a report detailing cases of inmates being restrained - often to prevent self-harm.

Psychotherapist Kyle MacDonald said it's further evidence we're failing mental health patients in this country.

"The mental health system wherever you look - whether in prisons or the community - is broken and we need a nation-wide independent review to get a handle on how we're going to fix this."

MacDonald said more people with mental health problems are ending up in prisons.

"For me it's just another red flag that actually we need a top to bottom review of the entire mental health system, including how we treat people with diagnoses in prisons," MacDonald said.