Mt Eden jail bosses have been ordered to stop holding inmates in vans outside the prison's walls as the overcrowding crisis extends into its second year.

Corrections Department chief executive Barry Matthews said yesterday that prisoner numbers had reached record levels, and would continue to increase faster than jails could be built.

Officials also admitted the crush could lead to more attacks on inmates or prison guards.

The department confirmed inmates had been held in parked vans outside Mt Eden Prison, although still on prison property, several times in recent weeks. Mr Matthews described the approach to the crisis as "innovative".

However, the practice was stopped after media reports detailed it yesterday. No action would be taken against managers, he said.

"Do we keep using vans? No we don't," Mr Matthews said. "I think it would be fair to say we're not going to criticise our managers over that. They were faced with a situation over the weekend and have been fairly innovative."

The prisoners were held at Manukau District Court cells at night, but had to be taken to a jail during working hours because the court cells were needed.

Employment agreements limit how many prisoners can be at Mt Eden during lockdowns, such as the lunch hour, so inmates were taken outside and kept in guarded vans.

Nationally, overflowing prisons mean inmates are housed in court and police cells at night. The problem has been extreme for more than a year, and is linked to law changes imposing tougher bail, sentencing and parole terms.

Prisoners held in court cells have gone on hunger strikes protesting conditions, and offenders are being shuttled between courts and Auckland Prison at Paremoremo for showers.

Mr Matthews said an expected seasonal drop in inmate numbers had not happened. Instead, there had been on average 30 extra prisoners a week for the past eight weeks. A $1 billion building project for new jails, and extensions of existing prisons, was under way.

"We are building cells as fast as we can and the numbers seem to be increasing faster than we can build."

Mr Matthews said a record 7547 prisoners were held in jails yesterday. Of those, 7323 were in prison beds, 151 in police cells and 73 in court cells.

While the Corrections Department said it used Ministry of Justice figures to forecast a drop, the worst-case scenario in those figures was that inmate numbers would top 7600.

Mr Matthews said he would give new Corrections Minister Damien O'Conner fresh options for tackling the problem. He would not say what those options were.

But he said the department would not comment on whether judges would need to consider remanding fewer people in custody, and releasing more on bail, until facilities were adequate to deal with the problem.

The Corrections Association, the union representing some prison officers, has warned of the risks posed by overcrowding and says attacks are on the rise.

Official figures show a decline in prisoner-on-prisoner assaults. However, nine guards were seriously assaulted in the 2004-2005 financial year and association president Beven Hanlon said there had been 29 assaults on staff this month.

Phil McCarthy, the department's public prisons manager, said yesterday that there had been an increase in incidents in the past six months.

"It's inevitable that if we have these numbers for this length of time the temperature will rise a little and there will be some kind of an increase."