Staff and inmates from Glen Innes and South Coast correctional centres are working to build modular houses and new kitchens for Aboriginal families in rural areas.
The partnership between Corrective Services Industries and the Aboriginal Housing Office (AHO) also gives inmates valuable work skills and qualifications.
Minister for Counter Terrorism and Corrections Anthony Roberts said the construction of a four-bedroom modular home was managed by two trade-overseers and built by 40 inmates at Glen Innes in six months.
"This program gives inmates the opportunity to learn meaningful skills, qualifications and a strong work ethic in custody, so they can walk out our doors and find a well-paid job," he said.
"It's also providing affordable housing for Aboriginal families in rural and remote communities, which is a point of pride for the Aboriginal inmates and staff members who work in the program."
The program offers skills and qualifications in working at heights, crane and dogging, operating a forklift, reading plans and specifications, basic labour skills and a Certificate II in Construction Pathways traineeship.
Aboriginal Housing Office Chief Executive, Jody Broun said skills development is key to sustaining Aboriginal families and communities.
"Ensuring inmates undertake practical skills training increases employment opportunities and in turn supports and strengthens broader Aboriginal communities, which is an empowering outcome," she said.
The house built at Glen Innes Correctional Centre was recently installed at a Taree site and is now home to an Aboriginal family. It was the first modular house produced by the Glen Innes program.
Inmates working at the South Coast Correctional Centre at Nowra, are gaining joinery and cabinetry skills by pre-fabricating kitchens for other Aboriginal Housing Office projects.
Commissioner Peter Severin said the skills could lead to secure employment post-release.
"The men in our furniture workshop are trained to develop product drawings to professional standards and use state-of-the-art cutting equipment. These are extremely valuable skills to the industry and could be the key to breaking that cycle of reoffending," Mr Severin said.