Mr Thomson has called for a pilot smoke-free scheme introduced at a locked ward at Wakari to be stopped.
Under the scheme at Wakari's 9B ward, only patients considered not to be a clinical risk are allowed off the grounds to smoke.
Smoking is not permitted in the ward itself, nor in an outdoor courtyard.
Mr Thomson said the board had not approved the measure.
District health boards are still able to designate areas for smoking, although increasingly hospitals, including psychiatric wards, are going smoke-free.
Mental health and community services manager Elaine Chisnall said smokers not approved for leave were offered help, which included nicotine replacement therapy.
The pilot has been running for a few weeks.
Those who were assessed as safe could leave the premises, which had always been the policy for those wanting to leave the ward for any reason.
The Otago Daily Times was initially advised smokers were allowed to smoke off the premises when accompanied by staff members.
This was dictated by "staff availability".
However, a day later the board advised this had been a "miscommunication".
Women's, children's, and public health group manager Pip Stewart said managers were drafting the smoke-free policy to be put before the board's hospital advisory committee for approval.
The pilot was "preparation" for the anticipated smoke-free move.
Mr Thomson said while he generally supported the smoke-free message, it was different for locked-in psychiatric patients.
Mr Thomson, who chaired the old Otago board's hospital advisory committee, where the matter was last considered in April, said the policy had not been signed off, and the pilot was "unacceptable".
He had communicated his displeasure to the board's senior managers.
"First and foremost, hospitals are about humanity. This demonstrates little understanding of what humanity actually means.
"It's a fundamental breach of human rights," Mr Thomson told the Otago Daily Times.
People in lock-in wards did not have the same options as others to wander off the property when they wanted to smoke, he said.
"We have these people at the most difficult time of their lives, and possibly for a big chunk of their lives, and if we can do nothing else for them, we can ensure they are as comfortable as possible."
Otago Mental Health Support Trust spokesman Mike McAlevey said the move reminded him of older, now discredited practices in psychiatric wards, where smoking was allowed as a reward.
Mr McAlevey had heard a report that someone staying at 9B was restricted by ward staff to one smoke per ward shift.
"It seems there is a danger that tobacco may once again become a tool for staff to exert power over the people in their care, as it was in the days of the old psychiatric institutions."
It was unfair prisoners were allowed to smoke but not psychiatric patients, he said.
