Constructed in the 1970s, Glen Parva has always held young offenders
A report into life at a youth offenders centre in Leicestershire has found causes for concern.
The Independent Monitoring Board has criticised the number of young men with mental illness placed in custody at Glen Parva Young Offenders Institute.
Living conditions were said to be inadequate and the falling numbers in education classes was criticised.
The Learning and Skills Council has said measures were in place to address the situation.
The IMB's annual report of Glen Parva also said it was worried over delays to extend the prison and described part of the living accommodation as "below the normal standard" and "unacceptable".
Education classes - which were contracted out to the Learning and Skills Council - were poorly attended with numbers falling month by month, the report said.
Glen Parva is the largest young offenders institute in Europe and has about 800 prisoners between the ages of 18 and 21.
However, staff at Glen Parva were praised for their commitment to procedures for new prisoners which were described as "of a very high standard".
The International Monitoring Board (IMB) said changes needed to be made to ensure offenders with psychiatric needs were sectioned accordingly.
The Ministry of Justice said a review into offenders with mental health issues was due to be published.
A spokesperson said: "The government is clear that wherever possible, mentally disordered people who offend should be treated rather than punished and the courts can order the admission of any defendant to hospital rather than prison.
"It is Prison Service policy that prisoners with severe mental illness are transferred to receive the appropriate treatment in hospital.
"The Prison Service invests £20m every year on mental health in-reach teams, with every prison in England and Wales having access to these services. Over £600,000 has been invested over three years on mental health awareness training for prison officers and staff."