A counter-terrorism expert is warning the New South Wales Government that its plan to build a supermax jail for extremist inmates could be counter-productive.

The State Government said the jail will be designed to separate extremist inmates from other prisoners and to prevent the further radicalisation of new inmates in jail on terrorism-related offences.

Criminologist and expert in radicalisation from the Australian National University Dr Clarke Jones said the State Government's plan would create a breeding ground for terrorism.

"I found it better that they mixed with other offenders, there's better chance for them to change in other environments rather than a terrorism ring," he said.

"We've got to look at how we structure deradicalisation programs and how we place inmates," he said.

"There's also inmates that are either convicted or on remand, there's different age levels, there's a whole lot of variables that could cause concern if they were simply thrown in a terrorist facility," he said.

Premier Gladys Berejiklian has outlined the plan as part of a $47-million package included in the state budget to be rolled out over three years.

"We'll be making sure we continue to have the toughest position in the nation in relation to reducing and eliminating terrorism activity," she said.

The facility will have the capacity to hold 54 inmates and will be built within the supermax complex in the Goulburn Correctional Centre.

Ms Berejiklian said the unit will also share information with other jails and intelligence agencies.

The Corrective Services Commissioner Peter Severin said there is evidence of about four to five people being radicalised while in New South Wales corrective services.

"It is a small number, nevertheless we do need to is ensure it remains that way," he said

Proposal draws mixed response from Federal Government

Federal Minister for Immigration and Border Protection Peter Dutton welcomed the announcement.

"We don't want people within the prison environment being indoctrinated, being converted into a radical form of Islam," he said

"I think the NSW Government has taken its responsibility in terms of people who are incarcerated very seriously and they should be commended for that."

But Attorney-General George Brandis said he had concerns with the plan.

"It seems to me to be a good thing so long as the way these prisons are designed and configured doesn't mean the terrorists are together in each other's company, reinforcing each other's ideology."