The Corrections Minister says it is possible an anatomically male transgender inmate could be placed in a womens' prison under new changes to regulations.
Transgender prisoners who have changed their gender on their birth certificate will now be managed according to that gender.
The applications of prisoners who have not changed their birth certificate but want to be moved to a prison of their identified gender will be considered on a case by case basis.
Corrections Minister Anne Tolley says the chief executive will make that decision and will take into account the safety of the prisoner, and the safety of other prisoners.
She says if a prisoner has committed any sexual offences, the option to move will not be made available.
Whangarei barrister Kelly Ellis, who has led the charge on getting recognition for transgender prisoners, says while the number of prisoners involved is small, it is hugely important they are treated with the dignity they deserve.
The changes will be in effect by the end of the year.