A lawyer taking action against Serco says the private prison operator should have had its contract cancelled earlier.
The Department of Corrections has announced Serco's contract will not be extended when it ends in March 2017.
The move follows an investigation into alleged assaults and fight clubs at the prison.
Lawyer Martin Hislop is taking action against Serco over the death of Nick Evans at the prison in May and on behalf of another inmate, Kevin Mussard, who was badly injured.
Corrections has been managing the prison since July, after the allegations of assaults surfaced.
Mr Hislop told Checkpoint that, while things improved for a while, an inmate he spoke to today said the violence was now worse than ever.
"Things have turned to the way they were before. The prison is violent," he said.
"There was an incident again this afternoon, where there was a huge amount of violence between a prisoner and four prison guards."
The mother of another man injured inside Mt Eden Prison said she was delighted Serco's contract was ending, and hoped the same would go for Wiri Prison.
Both of Alex Littleton's legs were broken in a prolonged attack by other inmates, who he says threw him over a balcony.
His mother Lorraine Littleton said Alex would be crippled for life and it should not have been allowed to happen.
"I was absolutely ecstatic, yeah. About time, and I hope we get them out of Wiri as well.
"Just for our family, we've gone through a lot of trauma, a lot of crime, a lot of sorrow, a lot of grief, a lot of - I can't even begin to say the worry and the pain that it's caused us, let alone Alex."
Ms Littleton said the prison would be much better run in government hands.
Corrections Minister Sam Lotu-Iiga said a lot had changed in the management of Mt Eden Prison in the past five years.
Mr Lotu-Iiga said remand numbers at the jail had gone up, making the facility hard to manage and run.
"Corrections considers that any future contract will require changes to ensure that Mt Eden Prison is managed safely and effectively," he said.
"The nature of the operations of Mt Eden Prison is not fully reflected in terms of the current contract."
Watch today's news conference with Mr Lotu-Iiga and Corrections CEO Ray Smith in Wellington:
Serco Asia Pacific chief executive Mark Irwin agreed the prison had "fundamentally changed" since the contract was signed.
"Its population, movements and security profile are all markedly different from those set out in the documents provided to tenderers six years ago, and in the contract itself. It clearly makes sense to reconsider the delivery model for the operations of MECF [Mt Eden Corrections Facility].
"Since July, we have worked to support the department during their management of the prison.
"We recognise that running New Zealand's busiest remand facility is a significant challenge for any operator, and we are committed to helping them ensure that it is safe and secure."
Mr Lotu-Iiga said the decision not to renew Serco's contract would not have any impact on the company's management of Wiri Prison in South Auckland.