A man who murdered a Dunedin woman while her toddler was next door has been refused parole, although the reasons remain slightly hazy.

Gareth Lawrence Smither (50) has been behind bars since he killed Karen Jacobs in 1997.

The man used knives and a spade to murder his victim, while her 2-year-old daughter Georgina was nearby, the court heard.

His bid for parole last year was declined because of "victim issues".

Family of Jacobs have repeatedly opposed the man's release, particularly to Otago, Southland or Christchurch.

As a result, Smither had been transferred to Waikeria Prison in Waikato but board chairman Sir Ron Young was still not convinced by the release plan.

At a hearing in June this year, he stressed the killer needed "long-term supportive accommodation".

Karen Jacobs with her daughter, Georgina. Photo / Supplied

The other reasons for refusing parole, however, were less clear, due to extensive redactions in the written decision.

"The second issue related to our concern with regard to [withheld]. It is true that there have been a number of [withheld]. The most recent [withheld]. However, whatever precisely is the diagnosis for [withheld] that upon release they consider that the [withheld] would need to follow up Mr Smither intensively in the community," Sir Ron said.

The board heard the minimum-security prisoner had settled "relatively well" at the new jail, though his work there had been cut down to three days a week to ensure he did not become overloaded or anxious.

Smither had been assessed as presenting an above-average risk of sexual reoffending and a low-average risk of violence.

Sir Ron requested a new forensic report ahead of the next parole hearing in December.