An anticipated surge in the NSW prison population to around 18,000 by 2020 will be met with a $3.8 billion funding injection to create an extra 7000 beds over four years.

The prison population has surged over the past two years in particular to about 12,000, sparking an overcrowding crisis.

The NSW Bureau of Crime Statistics has put the surge down to rapid growth in the number of people being arrested and a backlog of trials in the District Court, meaning people are held for longer on remand.

As well, new bail laws came into force in January last year that make it harder for prisoners to be released pending a trial.

"This is, it must be said, not money the state government is happy to spend," Mr Elliott said.

"My personal preference would always be that this money, this NSW taxpayers' money, is spent on schools and hospitals."

"But with an efficient police force and strong bail laws, the NSW government makes no apology for the fact that we have high demand and a high need for this capacity in our prisons."

The funding will be contained in next Tuesday's state budget and is comprised of $2.2 billion in capital works and $1.6 billion in recurrent funding over four years.

More than 2800 extra prison beds will be delivered within three years, including 620 at Cessnock, 160 at South Coast and 135 at the reopened Berrima and Wollongong jails, Mr Elliott said.

There will also be business cases developed for expanding existing jails across NSW to increase capacity by about 4200 beds by around 2021.

Dr Sean Sweeney, the former head of construction at development company Grocon, has been appointed to oversee the delivery of the infrastructure program.

Opposition corrections spokesman Guy Zangari said the government's announcement was "admitting to its failure of the last four years, when it decided to shut down four prisons".

"What you've got today is an announcement about an increase in beds, but what are they going to do to increase staffing levels of prison officers?" he asked.

Mr Zangari noted the government has announced it will sack three-quarters of teaching staff from the state's jails, slashing 152 full time positions to 20.

Greens MP David Shoebridge said NSW was now seeing "the real cost of [Premier] Mike Baird's growing police state, and it starts with $3.8 billion being poured into more and bigger jails".

"Baird's angry bail laws, new offences, underfunded courts and aggressive policing has created a surging prison population at a time when violent crime is at historic lows," he said.

"The costs of this policy, both socially and in direct budget terms, are enormous and extremely damaging."