Allegations of corruption at the Serco-run men's prison in Wiri in south Auckland need to be taken seriously by the government, the Labour Party says.
Auckland South Correctional Facility is run by the multinational company under contract to the Department of Corrections.
Labour corrections spokesperson Kelvin Davis said the accusations, which included that prison officers were being paid to smuggle cigarettes to inmates, were serious.
"The problem of guards potentially taking in, allegedly taking in contraband... How would I describe it? It sounds like it's a crime. Extortion of money from these families, who I doubt that they can afford it. This needs to be... investigated and stopped," Mr Davis said.
Corrections Minister Judith Collins said she took the accusations seriously, and the matter had been passed to police.
But Ms Collins said not all prison officers should be painted as corrupt.
"I'm condemning any attempt at bribery of corrections officers and I'm condemning any acceptance of that bribery by corrections officers.
"What I will not put up with is people who make allegations, don't back them up and then say we just want to besmirch all Corrections officers."
She could not guarantee the identity of the woman who had apparently made the allegations would be kept confidential, nor that she would not face charges for her part in any illegal activity, she said.
But Mr Davis described the person who made the accusations as a whistleblower, and said they should be protected.
"Whistleblowers are doing the right thing by saying that there is, you know, an issue, a law's been broken potentially.
"And if this person is prosecuted, then that'll just scare off other people from speaking out and telling the truth about what's happening in our corrections facilities."
The prison is not the first Serco-run facility in New Zealand to face allegations around its operations.
The company has failed to have its contract for Mt Eden Prison renewed, after accusations of assaults and "fight clubs" surfaced in mid-2015. It was also ordered to pay $8 million to Corrections.