The prisons watchdog is questioning the policy of placing high-risk criminals, including sex offenders, in open jails.
Leyhill is home to many inmates classed as high risk
Chief Inspector of Prisons, Anne Owers, said Leyhill near Bristol, which has no perimeter fence, was housing up to 50 inmates of high or very high risk.
The guidance on whether these offenders should be in open prisons at all was "unclear", she revealed in a report.
Ms Owers is also calling for discussions with the Parole Board about the "appropriateness" of the policy.
Ms Owers said in her report: "Leyhill received prisoners identified as high or very high risk, but such prisoners would not normally be able to work or visit outside prison - which called into question the point of them being in open conditions.
"It was increasingly difficult to find suitable placements for the relatively large group of men at Leyhill convicted of sex offences."
She continued: "Managers were rightly concerned that Leyhill was required to take increasing numbers of such prisoners whom they were not able to progress."
The report, which is published on Wednesday, made 127 recommendations for improvement.
Ms Owers also raised concerns about poor relationships between staff and prisoners, which was marked by "considerable distance" and "an atmosphere of mutual distrust".
The jail, near Bristol, was commended for being reasonably safe with little evidence of bullying or self-harm, "sound" public protection and a good range of activities and workshops.
Ms Owers said: "Like all open prisons, Leyhill is receiving a wider range of prisoners.
"However, it needs to strengthen its resettlement work by providing and supporting more outside work for those prisoners who are eligible for it."