The watchdog's report, Meeting the Learning Needs of Children and Young People who Offend, said local authorities must do more to secure full-time education, training or employment for children and young people in the youth justice system.
Figures show that between April 2006 and March 2007 only 59 per cent of young offenders in Wales were in full-time education, training or employment. This is drastically short of the 90 per cent target set by the Youth Justice Board for youth offending teams (YOTs).
Bill Maxwell, the chief inspector of education and training in Wales, said many young offenders have complex needs, meaning they have had poor experiences of the education system. "Their experience of education leaves some young offenders feeling frustrated and angry because they have to study subjects that they find too difficult to understand," he said.
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