Updated 8.36pm: A significant shake up is on the way for three of the country's prisons.

The government's defending the closure of three prison units, and loss of hundreds of jobs.

MORE: Corrections CEO Ray Smith on the changes 

260 jobs are on the chopping block, but space for prisoners is still increasing, going up around the country by 433 beds. 

Corrections says the prison units it wants to close simply aren't up to scratch.

Corrections chief executive Ray Smith has proposed the closure of parts of Waikeria, Tongariro/Rangipo and Rimutaka prisons.

Ray Smith says affected staff have options.

"If they want to stay in the prisons service there are 17 across New Zealand, and I'll put up $20,000 a head if it helps keep them in the service. Some will probably take enhanced early retirement."

Ray Smith says the facilities are old and tired.

"It means they've deteriorated, and they were built for a different purpose. They weren't built to rehabilitate people, the cells are often cramped, the conditions aren't great for the staff to work in."

Corrections Minister Sam Lotu-Iiga admits it will be unsettling for staff, but says it's necessary.

He says those corrections officers whose jobs are saved will be in a better environment, that's more safe, and secure.

Money also comes into it.

Closing the units saves around $165 million.