A £3m prison wing has been used by just one inmate for most of the time since it opened, an inspector's report says.
The unit for minor offenders who serve their sentence at weekends is at HMP Kirkham, near Blackpool, Lancashire.
The scheme let inmates keep their jobs during the week but jobless inmates did not use it as they lost their benefits.
Just one inmate had been using the wing during the week, but a deal has now been agreed letting jobless prisoners use the wing and claim benefits.
The Department of Work and Pensions has thrashed out the deal after previously saying unemployed prisoners were already getting benefits of shelter and food at the jail and could not be `actively seeking work'.
The Kirkham unit, which has 39 rooms, had no more than three prisoners using it at any one time, the report said.
Eighteen staff were employed to work on the unit, including two senior prison officers, six prison officers, six operational support staff, one administrative officer, a probation officer and two community service officers.
Between 35 and 40 prisoners had been using the unit at the weekend, though.
The Home Office scheme is also being tried at Morton Hall women's prison near Lincoln.
Ms Owers said the prison was "improving" but said the problems with the part-time wing "need to be tackled".