Statistics released by the Ministry of Justice show that 72.3 per cent of under-18s reoffended within 12 months of being released from custody for the year ending September 2011, up from 70 per cent for the previous 12 months.
The reoffending rate for all young offenders convicted of a crime - whether they receive a custodial sentence, community order, or no further action - has also increased.
For the 12 months ending September 2011, 36.1 per cent reoffended, compared to 34.8 per cent for the previous year.
The increases come against a backdrop of fewer first-time entrants into the youth justice system and fewer young people being sentenced to custody.
Annual youth justice statistics released in January showed that during 2010/11 there was a total of 176,511 proven offences by young people, down 11 per cent on 2009/10.
Meanwhile, numbers of young people entering the youth justice system for the first time fell from 62,504 in 2009/10 to 45,519, and the average number of young people in custody for 2010/11 was 2,222, a 17 per cent decrease on the 2009/10.
The Ministry of Justice conceded that “a hardcore group” is continuing to reoffend at “an alarming rate” among both juveniles and adults.
Justice Secretary Chris Grayling said: “These figures make a compelling case for our important reforms - reoffending rates remaining doggedly high as a hardcore of offenders continue to cause misery in communities up and down the country.”
The government wants to tackle reoffending rates for young people leaving custody by creating a network of “secure colleges” that focus on education.
But Penelope Gibbs, chair of the Standing Committee for Youth Justice, said the rise in reoffending rates of young people leaving custody was "sad" in light of the fact that they had been steadily falling in recent years.
"As the custody population has gone down the children who are in there probably have more entrenched offending behaviour," she said.
"But what it shows is that despite a much smaller population, custody does not work. Even with capacity in the system, custody is not providing the kind of rehabilitation it should be providing given that it is very expensive. It should be used as sparingly as possible since the outcomes are clearly not satisfactory."
Frances Done, chair of the Youth Justice Board said: "The reoffending rate for young people in England and Wales remains stubbornly high and these latest figures emphasise this.
"However the number of first-time entrants continues to fall, which has left the youth justice system managing a smaller cohort, consisting of the most prolific, difficult and challenging young people.
"It remains one of our top priorities, to ensure this group receives the most effective rehabilitation, along with support around education and welfare, to ensure they lead a life free from crime and help reduce reoffending in the future."