THE new Grafton Correctional Centre will house 1700 prisoners, up from 1000 announced earlier this year, and feature state-of-the-art security and rehabilitation services.

In an announcement ahead of next week's NSW Budget, Minister for Corrections David Elliott said the facility in the Pillar Valley would become a regional hub, similar to the Cessnock correctional centre.

The centre will be supported by existing smaller specialist centres, allowing most prisoners to complete their sentence and reoffending programs in one region, saving on transport costs and delivering better value for money.

Mr Elliott said the Government had received four high-quality Expressions of Interest in the New Grafton Correctional Centre, and invited three consortia to take part in the Request for Proposal stage.

The upcoming NSW Budget will fund around 7000 new beds as part of what the government says is record investment in the correctional system.

The 2016-17 Budget will include $3.8 billion over four years to fund a long-term infrastructure plan to cater for the rising prisoner population and better manage and rehabilitate inmates.

It will fund the development of business cases for expanded correctional precincts at existing sites across NSW, expected to boost capacity by about 4,200 beds in the longer term.

Dr Sean Sweeney, the former head of construction at Grocon, Australia's largest privately-owned construction company, has been appointed to oversee the delivery of the prison infrastructure program.