Any delay to the opening of HMP Kennet would be a big blow to Mr Reid, who has vowed to use the new prison to tackle Britain's escalating over-crowding crisis.
Last week, the Home Secretary was forced to remind judges not to jail non-violent offenders as prisons reached their capacity of 80,716.
Even the extra 350 places at Liverpool - part of a nationwide capacity increase of 2,000 - may not be enough, with the prison population predicted to hit 83,500 by the start of the summer.
In a further sign of the crisis, Mr Reid was forced to postpone a planned speech in Liverpool yesterday in order to concentrate on the troubles engulfing his department.
The Home Secretary was expected to announce 2,500 further prison places by building cells on existing prison sites - but no announcement came.
The Tories blamed prime minister-to-be Gordon Brown for the crisis, accusing him of wasting billions on identity cards instead of building new prisons.
Shadow Chancellor George Osborne said: "It is clear that Gordon Brown's political meddling is letting the country down and making the country less secure."
The dispute over staffing at HMP Kennet centres on "contract supplementary hours", a system requiring prison officers to work nine hours at any specified time within a 13-week period.
The POA also believes filling the new prison with temporary staff for short periods will prevent the development of a settled atmosphere necessary for rehabilitation.
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