Double bunking of 1000 more prisoners scares the prison officers' union and will see more officers move to Australia, it says.
Prison officers argue it will make their jobs dangerous by increasing prisoner unrest.
Today's budget documents said double bunking would start next year at the Northland, Auckland women's, Spring Hill (North Waikato), Otago and Mt Eden prisons.
It would add nearly 1000 beds at those prisons, to a prison system that now has a capacity of about 9500.
"It scares the crap out of us. It's not double bunking, it's overcrowding of the prison system," said Beven Hanlon, president of the Corrections Association New Zealand, which represents about 3000 prison staff.
Prisons weren't safe for corrections staff now, he said.
"We haven't seen the details but our concern is about the unsafe situation now and the proposals I have seen for double bunking haven't addressed that. I am concerned they are tracking ahead and there is nothing in there in terms of officer safety."
Mr Hanlon said it was "most definite" that some officers would opt to go and work in Australian prisons, where they could earn more money and they would be safer.
The budget had allocated more funding for more frontline prison staff but that was always going to be needed, he said.
Funding of $385.4 million over the next four years would help cope with forecast increases in the prison population, Corrections Minister Judith Collins said.
Some $218.6m in operational funding over four years, and $145.8m in capital funding from 2009-2011 would address the "immediate need for prison accommodation", she said.
That money had been allocated for increased double bunking at the five prisons, she said.
"The cost per bed will be considerably less than building a new prison," Ms Collins said.
"The Government will ensure the Department of Corrections has the money to plan and build the extra beds needed to keep pace with prisoner numbers," she said.
Some $24m in capital funding was allocated over 2008-2010 for designing and planning extra prison capacity in the upper North Island.
