Convicted murderer George Baker has been placed in isolation after taking a fellow inmate hostage yesterday.
The drama at Auckland Prison at Paremoremo unfolded when Baker, who has a history of mental health problems, took a man hostage at 3pm.
He was believed to be armed with a makeshift knife and was demanding transfer to a less secure unit.
The hostage, believed to be an elderly sex offender, was freed about 1.45am today after Baker gave himself up peacefully.
Corrections Association union president Beven Hanlon said the prison had been warned inmates had a frightening array of weapons at their disposal, because of the prison's state of disrepair.
There were bits of metal sticking out of walls which could be broken off and sharpened into a weapon, he told Radio New Zealand.
However, he said the prison was not prepared to fix the problems.
Corrections Department northern regional manager Warren Cummins said Baker had been placed in segregation and the hostage had been seen by medical staff and offered support.
"We will now be undertaking a full review into the incident and the police will be conducting their own investigation to decide what charges will be laid."
The prison went into lock down today while staff were debriefed, but had since returned to normal operations, he said.
Baker took the man hostage in the special needs unit of the prison, which is where prisoners with psychological and behavioural needs were housed to receive specialised care.
It was unclear what led to the incident and that would not be known until Corrections had talked to those involved, Mr Cummins said.
Hostage situations in New Zealand prisons were rare, he said.
"But given we manage the most volatile and dangerous people in our society, these type of incidents can sometimes occur."
Staff regularly practised for these type of situations and the training had paid off last night, Mr Cummins said. "The staff and managers last night were fantastic. They successfully contained the situation and maintained contact with Baker throughout the incident.
"Their skills ensured a peaceful resolution to the incident and their actions are to be commended."
Police and Corrections Minister Judith Collins said she was proud of the way the situation was resolved peacefully.
"Incidents such as this demonstrate the bravery and operational expertise that makes our police and Corrections staff among the finest in the world.
"It reminds us of the dangers they face every day while keeping the public safe."
Baker, 27, killed 17-year-old Liam Ashley in the back of a Chubb prison security van taking them to Auckland's Mt Eden Remand Centre three years ago.
He is serving a life sentence.
Baker's lawyer Tony Bouchier said today Baker had mental health issues which often led to "episodes" when he stopped taking his medication.
