Updated 5.28pm: The Prime Minister is refusing to be goaded into harsher penalties against Serco, until a review is finished.

The private prisoner operator has been fined half a million dollars for violence at Mount Eden Prison.

A Department of Corrections management team has begun work at the prison today to help fix the problems.

John Key said he can't do anything else until there's conclusive proof of what's been happening.

"Should they face bigger penalties, you know, some potentially more extreme than a potential fine? I don't know that - that's why we've got an enquiry."

Corrections announced it was taking over the management of Mt Eden Prison from private company Serco as fresh allegations of abuse and violence came to light.

Corrections Minister Peseta Sam Lotu-Iiga said they have stepped in under a clause in the contract Corrections have with Serco, and he expects them "to improve the management of the place, and we'll see how we go from there."

However, according to Lotu-Iiga, the Corrections Department are not looking at stepping into the Wiri Prison in south Auckland, which is also run by Serco.

"They have apparently been assaults - there are assaults at every prison - and we are looking into that. But at this point they've assured me that Wiri is running fine," he said.

The Corrections Department has faced criticism over its management of Mount Eden prison and Serco.

New Zealand First leader Winston Peters thinks the Department has not been fed the information it should have got from Serco, and has been lax in ensuring the information it did get was checked out.

"Why was it that the government was saying just three months ago how successful Serco was? Now we know that it wasn't successful three months ago or six months ago."

But Peters believes Lotu-Iinga is not to blame for the policy that's resulted in Mount Eden being privately run.

"This policy was put in place by people like Judith Collins. So these blind, ideological theorists have got it wrong and Sam is paying the price for it."

Prime Minister John Key strongly believes there's a role for the private sector to run New Zealand prisons, and there will always be "some people who will do everything they can to try and point out that Serco's bad and don't like the idea."