The proposals were outlined by the Youth Justice Board in its secure estate strategy in July and were touched on by justice minister Lord McNally during a debate in the House of Lords this month.
They involve developing smaller units within existing YOI sites that can offer specialist provision, such as the existing Keppel Unit at Wetherby YOI.
But the Howard League for Penal Reform has hit out at the idea, raising "severe reservations".
In a letter to Lord McNally, Frances Crook, chief executive of the Howard League, said: "Prisons fail children and it seems nonsensical to attempt to fix something that is broken beyond repair, rather than decommission them entirely.
"An apt analogy I heard recently was that if a school was failing you would not put a special unit on site and claim to be solving to problem.
"Although we acknowledge the good work of the Keppel Unit relative to main site prisons, the needs of children are best met from the starting point of designing provision around their needs, such is the case of secure children’s homes, rather than adapting adult provision to children’s needs, as is the case at the enhanced units in prisons."
Lord McNally has said that due to the time it is taking to analyse responses to the consultation it is likely that the government response, outlining a course of action, will not be published until after January next year.
