The NAO report, Managing Offenders on Short Custodial Sentences, found that daytime activities for those serving short sentences of only a few months was "generally inadequate", leaving them to spend most of the day in their cells.
Short sentences did little to reduce reoffending and were more costly than more effective community sentences, the report found.
While short-sentence prisoners in 2008 had an average of 16 previous convictions, those receiving community orders had eight.
The report also found that while a six-week stay in prison cost £4,500, a "highly intensive" two-year community order involving unpaid work placements cost £4,200 and a one-year community order involving drug treatment cost just £1,400.
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