EXPANSION work is underway at Fulham Correctional Centre, with construction expected to be completed by September next year.
Once the $80 million project is finished, the prison population will approach 1000.
The project involves multiple buildings, including a new 35-bed management unit, 102-bed accommodation building, multipurpose activity hub, central movement control building and a prisoner shop.
Refurbishment and extension work to the existing kitchen and laundry building, main reception, health centre and opioid substitution therapy program building, along with upgrading building services, site infrastructure and landscaping, will also be completed.
Design planning for the units has been underway for some time, and building began in mid-November with site establishment works.
Lead contractor for the project is Ireland Brown Constructions, a Melbourne-based firm.
The extension will take the capacity of the privately-managed Hopkins Rd prison to 995, making it the third largest in Victoria.
Eastern Victoria MLC Jane Garrett said the expansion works would deliver a modern facility to support the work staff were undertaking to help prisoners turn their lives around and reduce the risk of them re-offending.
The build is part of a push to expand prisons across the state to meet growing demands.
In December 2017, the state government announced it would provide money for more than 470 new beds during the ensuing three years across the state.
According to the government, prisoner numbers have grown in recent years, driven largely by changes to the parole system, sentencing changes, extra police on the beat and a rising population.
Victoria's prisoner population expansion comes at a hefty cost to taxpayers.
A report by the Auditor-General in March last year found the annual cost to the state of managing male prisoners - who make up 92.5 per cent of the prison population - had risen 90 per cent, from $425.9 million in 2010-11 to $811.2 million in 2016-17.
Each prisoner costs the state $127,000 a year on average, the report found.