"There is a potential crisis waiting to happen" at HMP The Mount in Bovingdon, according to a senior councillor.
Personnel resources have already been described as "stretched to a limit" in a report in March.
But a new block, which will take the prisoner count from 770 to 1,008, is set to open in September and will include a "much higher number of shorter term (i.e. potentially more volatile) prisoners," according to a report by the Independent Monitoring Board.
Yet figures show that the prison is still failing to recruit enough officers, with the latest employment figures showing that the Molyneaux Avenue prison has 270 employees - 85 short of its target and the civil service is currently advertising for 50 prison officer jobs to make up for its shortfall.
Councillor Gbola Adeleke, who represents Bovingdon, Chipperfield and Flaunden, believes that over-crowding and staff shortages at the prison are a "crisis waiting to happen."
He said: "I think it is necessary to stress the fact that there is no panic in the village at present and many residents may not have the full details of the situation at their finger tips. However, it is well known that the Mount is overcrowded, there is not enough staff and it is a potential crisis waiting to happen.
"With the planned increase in the number of inmates being admitted to an already overcrowded prison and the well publicised staff shortage at The Mount, coupled with difficulties in recruiting prison staff, the residents of Bovingdon are bound to be nervous.
"While there is still no cause for alarm, it is clearly not a satisfactory situation for the villagers to know that the prison is undermanned."
However, the Tory councillor does not believe over-crowding will lead to more prisoners escaping.
He said: "I doubt it very much if this would be the case, but it will certainly create a very uncomfortable and volatile environment in the prison. The system can barely cope at present with the volume of prisoners and limited accommodation.
"It is a national crisis which will surely have dire consequences unless the authorities take the constructive and sustainable measures now."
Dacorum Borough Council passed plans put forward by The Ministry of Justice to construct three new buildings including a new housing block, kitchen and sports changing block in February last year.
This is the latest in the series of expansions for the Molyneaux Avenue prison, which was originally built to house 480 youth offenders across five wings but has grown to accommodate 786 C category prisoners across eight wings.
Yasser Mehmood, a prison service spokesperson said: "HMP The Mount is appropriately staffed and safely run. A recent inspection report highlighted a successful year at the prison and rightly praised staff for their adaptability and commitment.
"Additional staff are being recruited ahead of a new wing opening later this year, which will ensure we continue to provide a safe and decent prison."