A NEW prison boasting state-of-the-art security and surveillance is to be built in Grafton in NSW.

The new prison will cost $A560 million, house 1700 inmates and employ 600 staff, making it the largest prison in Australia. The prison will comprise a 1000-bed, male maximum security facility, a 300-bed, female maximum security facility and a 400-bed minimum security facility.

NSW Corrections Minister David Elliott said the prison would be built and operated by consortium Northern Pathways comprising Serco, John Laing, John Holland and Macquarie Capital.

"The project received very high-quality bids, but Northern Pathways has a significant focus on our commitment to reduce re-offending," Elliot said.

The new centre will be responsible for remand, reception and placement for specified offender groups and will provide rehabilitation services to reduce reoffending.

It will be located on a 195-hectare site at Lavadia, approximately 12.5km south-east of Grafton, which has been purchased by the NSW Government following agreement with the former landowner. Construction will begin this year, creating 1100 jobs, and the prison is expected to be completed in 2020. ♦