Local criminals are being turned away from a Staffordshire young offenders' institute (YOI) because it has to make room for inmates from London.
Managers said the link between youngsters and family is broken
Managers at Werrington YOI in Stoke-on-Trent said they are being told to accept youngsters from the South East.
The director of youth services in the city said it means youngsters being jailed far away from their families.
The Youth Justice Board said the problem was caused by overcrowding.
Director of youth services in the city John Tate said: "It is the break-up of family connections that is most worrying for us.
Situation not enhanced
"I don't know that I am confident that it can change because of the situation nationally.
"We don't see the whole situation as being enhanced by the fact that part of our people are moved because of this policy."
A spokeswoman for the Youth Justice Board, which places young offenders in institutes across England and Wales, said the situation was caused by overcrowding in the system.
She said the latest figures showed that on 26 October, of the 3,308 beds in YOIs there were only 52 vacant with 40 youngsters expected to be given jail terms that day, leaving 12 spare beds in the entire system.
"This is a practical problem that when a YOI is full we have to house people elsewhere," she said.
"We do have a guideline to house people within 50 miles of their home but that can't always be done because of the number of people in the system.
"That's why we are calling for a review of sentencing.
"There is a better way of doing this, by using community sentencing which gets rid of the problem of resettlement which can help people perhaps better than custody does."