The Corrections Department has begun moving prisoners out of a sinking cell block at Ngawha prison in Northland.
The department says one end of the block has sunk by 13cm - which has opened a vertical crack between two concrete wall panels on an outside wall.
Critics of the prison say it should never have been built in a geothermal area.
But infrastructure manager Derek Lyons says the problem is confined to one end of one building and is caused by uneven consolidation of the fill used in the building platform.
He says the department has insurance for such events and is negotiating with the insurers over the cost of remedial work.
Mr Lyons says the work will start before the end of the year, and the 80 or so inmates in the block are being moved to other prisons.
The work will take about nine months; the cost is unknown.
