A previous inspection in May 2007 raised safety concerns, but these have been addressed and the number of assaults reduced, the report said.
The Reading institution, a Victorian-era prison that has held young people since 1992, now has a well-managed early days programme, with better staff-prisoner relations and "much improved" health services, it said.
However, there are still some weaknesses in resettlement management and sentence planning, the report added.
Dame Anne Owers, the chief inspector of prisons, said: "Reading has made considerable improvements over recent years. This is all the more commendable because the prison has had to contend with the limitations of outdated buildings and the challenge of a volatile population of young adult offenders."
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