The report Transition through detention and custody - Arrangements for learning and skills for young people in custodial or secure settings, reveals that assessment of young offenders' skills, aspirations and learning needs is often poor. Preparation for independent living when they leave custody was also assessed as minimal.
Among other problems highlighted was a failure to transfer personal information from schools to detention centres and the flow of information about young offenders' education when they moved within the secure estate.
Secure facilities and youth offending teams were criticised for not developing strong links with schools, colleges and employers.
Ofsted chief Inspector Christine Gilbert said: "Young people moving through the youth justice system need well co-ordinated education, training and support if they are to reintegrate into the community.
"But, too often, information about young people entering and leaving secure establishments is not good enough to enable organisations to plan effectively to meet their needs."
The Youth Justice Board, councils and youth offending teams are being urged to improve their communication and systems for transferring information.
This includes councils developing a "national statutory plan," for each young offender. This would ensure that their education and preparation for the outside world is seamless as they progress through the criminal justice system.
The report was based on inspections of 23 facilities, including secure children's homes, between May 2008 and June 2009. Ofsted also looked at inspection reports from all 139 youth offending teams.
Sir Paul Ennals, chief executive of NCB said: "This report provides us with an opportunity to make sure the education and training of young people in custody receives the attention and investment it merits.
"We need to invest in these young people, who are often from troubled and complicated backgrounds, when they are ‘inside', to prevent them from coming back and costing the country more.
"Offender education measures, which received cross-party support in the Apprenticeships, Skills, Children and Learning Act 2009, may help to address shortfalls identified in the Ofsted report. We want to ensure the positive impact these changes will have are recognised by the new government and implemented in full by local authorities."
