The fence is being built by the Waitaki Development Board, with Department of Conservation approval, from Holmes wharf north to the Oamaru Creek, to protect penguins from humans and dogs.
But Miss Adams said it was being built along the existing fence line, after she had lobbied the board and Waitaki District Council to have it further inland.
The reserve is being eaten away by coastal erosion and she predicted it would not be long before parts of the fence were undercut.
The cliff face is only three or four metres away in some places.
"I'm extremely disappointed and concerned money is being spent on a new fence when it will probably have to be moved soon because of erosion," she said.
"All they are doing is bolting new posts on to the existing fence."
Miss Adams suspected the council and board did not want to expand the reserve because it would impinge on an area where they hoped to put a campervan park.
The fence was also supposed to offer better protection for the penguins, but she said anyone determined enough could still get into the reserve.
Miss Adams looks after the reserve and its nesting penguins voluntarily, but she is worried the fence will keep her out.
The area inland from the fence had a toxic waste dump of contaminated soil stripped from a former timber treatment yard.
"How can they even consider a campervan park over a toxic waste site?" she asked.
Miss Adams said she planned to take up the issue of the fence with Minister of Conservation Steve Chadwick, Waitaki Mayor Alex Familton and the council.
