The fresh allegation has prompted to him to step up measures to ensure the safety of prisoners and staff at the Serco-run prison.
In a statement, Mr Smith said he had been dealing with a series of serious allegations in the last week about fights and mistreatment of prisoners at the prison.
These claims were now being investigated by the Ombudsman and the chief inspector of prisons.
"The public has the right to know that their prisons, run by Corrections or by a private company, meet the standards that we've come to expect - the bottom line is that prisoners must be safe when serving their sentences."
Mr Smith said he learned today that another prisoner transferred from MECF to another state-run prison arrived with injuries and had made serious allegations about his treatment at the Serco-managed prison.
"I feel I now must consider taking firmer steps to ensure the safety of prisoners and staff," he said.
"I am therefore taking legal advice and considering the full range of options available to me in our contract with Serco who run this facility.
"I will be giving these options my full attention and intend to meet with the Minister to discuss these options."
Corrections Minister Sam Lotu-Iiga said he was advised of the fresh allegations about MECF this afternoon.
"I expect to receive advice from Corrections Chief Executive Ray Smith about the options available to address the situation," he said.
"I will not be making any further comment until I have received and considered this advice."
EARLIER STORY
Serco has been accused of a "cover-up" after attempting to keep from the public details about an inmate who suffered two broken legs. The Corrections Minister has revealed it had been fined $300,000 in the last year for breaching its contract with the Government.
Peseta Sam Lotu-Iiga revealed the financial penalties for the private prison operator under questioning in Parliament this afternoon.
The breaches at Mt Eden Correctional Facility in Auckland for the 2014/15 financial year included understaffing, mixing accusing prisoners with other prisoners, failing to give "minimum entitlements" and not giving adequate notification about incidents.
The minister said the jail was currently ranked as "exceptional" in prison league tables which were compiled by the Corrections Department.
He rejected claims that there was a dysfunctional relationship between him and his department, despite the fact he was apparently unaware about violent incidents in some prisons earlier this year.
This morning, Corrections released details of an inmate's terrifying run for safety at the Auckland jail, which ended with a fracture to his left ankle and right leg.
Just 15 hours earlier, the New Zealand Herald was told by Serco's media adviser Jane Palmer that information about the prisoner's injuries would not be made public. Ms Palmer said the company had "checked with the prisoner" and was not releasing the information at his explicit request.
Then, this morning, a detailed account of a prison inspector's investigation was made public by Corrections chief executive Ray Smith.
Labour's Corrections spokesman Kelvin Davis said Serco is attempting to "whitewash" the violence inside the Mt Eden Correctional Facility it was contracted to operate.
"It's a cover-up. What are they hiding? This is a department out of control. It almost defies belief things can be this bad."
But Ms Palmer rejected this, saying she was acting on a request conveyed by the person when he was an inmate.
Mr Davis has made claims of prisoners being dropped off landings at Mt Eden prison as part of the institution's culture of violence. In Parliament earlier this week he said he had been told of a separate case in which inmate Nick Evans had suffered a ruptured lung - the complications of which later killed him.
Serco has denied there is a practice of "dropping", saying inmates would be showing injuries if there was such a practice.
It was this statement which led to the Herald seeking details from Serco of the inmate with two broken legs. In February, when the incident happened, the inmate's mother told the Stuff website her son was attacked by four gang members.
"He's suffered terrible, multiple injuries and has been told his injuries have the potential to affect him long-term or even permanently. He was attacked in his cell and managed to escape out of there. He was thrown over a balustrade and fell two floors."
Corrections confirms injury
Corrections said this morning that the inmate was injured after falling from a balcony, but says he was not "dropped".
Chief executive Ray Smith said the chief inspectorate's investigation into the incident had been completed and Serco had been asked to respond. He said the inspectorate concluded the prisoner fell as a result of being chased by another offender who then physically assaulted the prisoner.
"There was no suggestion made in the report of any practice of 'dropping'," he said.
The inmate was hospitalised, treated and returned to prison.
Corrections' national office was informed of the incident within the required 24-hour period for a serious assault.
"The inspectorate's investigation found no evidence that MECF staff were aware that the prisoner's welfare was at risk prior to their officer witnessing him fall over the balustrade and being chased by another prisoner," Mr Smith said.
"The inspectorate is satisfied that the unit was appropriately staffed on the day of the assault and that prison management dealt with the incident in a manner that was deemed appropriate at the time."
Corrections minister Sam Lotu-Iiga backed Serco on Tuesday, saying the company had no knowledge of prisoners being dropped from landings.
"I would note though, that if there is evidence of this practice known as 'dropping', which neither I nor Corrections nor Serco have ever heard of, there will be serious consequences."
