Corrections introduced a tattoo removal programme in 2000, before terminating the service on July, 2006.
Asked if the department would reconsider the programme, Corrections Minister Judith Collins was unequivocal - "No".
"Corrections is not in the business of removing tattoos."
However prisoners were able to access other services through Work and Income, private and non-government organisations, a Corrections spokeswoman said.
Under the scheme the majority of tattoos removed were "in highly visible areas, had been non-professionally acquired and were gang-affiliated".
Prisoners who took part in the now defunct programme underwent a strict acceptance criteria, including a requirement that the prisoner had completed rehabilitation programmes, and was close to release.
"Consequently there were only a few prisoners who qualified and were interested to participate in the Department's programme."
Corrections confirmed John Gillies, who stabbed a Gisborne constable in the neck, chest and thigh in 1993 and bashed two more police officers in 2004, had his "Mongrel Mob Forever" tattoo removed with taxpayer-funded laser surgery while in prison.
Further information on the Tattoo Removal Programme was being considered under the Official Information Act.
Work and Income chief executive Mike Smith said prisoners were not entitled to grants to remove tattoos, but once leaving prison and they were actively seeking work and met the criteria - "they are eligible for the grants".
Available through the Transition to Work programme, clients could have their tattoo removed by a registered medical practitioner, to a maximum of $1500 over a 52-week period.
The grants did not have to be paid back, and did not always cover the full cost of tattoo removal, Mr Smith said.
"We don't record specific types of tattoos, but anecdotally we know that it is the visible tattoos that people believe can be a barrier to employment.
"We have seen cases where it has improved people's ability to secure employment.
"Former gang members in particular may have very visible facial tattoos, which they want removed in order to help them start again and turn their lives around."
