Parc Prison is the only privately-run prison in Wales
Inspectors have criticised Parc Prison in Bridgend for not having enough resources to carry out its role as a training prison for Wales.
An official report said there were only 70 education spaces for 1,200 male prisoners at the private jail.
The Prison Reform Trust said prisoners needed to learn adequate skills to be properly prepared for their release.
Parc said it was reviewing the matter but the local MP said inmates must have up to 40 hours a week on training.
Bridgend MP Madeleine Moon told BBC Radio Wales: "We've all got to be worried about that because if we don't use the opportunity while these people are in prison to give them access to the skills that they need to have a different life on the outside, we're wasting the time in the prison.
She said academic staff at the prison were "working their guts off" but they had too much to do.
Ms Moon also said a review planned by the autumn was not good enough.
"These are extremely vulnerable people, these are people who if we don't help them while there in the prison estate are going to come out into society, and the rest of society is going to pick up the problems," she said.
Dame Anne Owers, Her Majesty's Chief Inspector of Prisons, published the report after an unannounced inspection of the category B male adult prison and young offenders' institution.
It said there had been some improvement in the quality of education and work.
But it said there were only 70 education spaces for 1,200 prisoners, and only 289 work places, some of them in contract workshops with too few opportunities to gain work-related skills.
At any one time, there were at least 400 officially unemployed prisoners, and many of those in the contract workshops were in fact unoccupied, the report added.
The report also found that vulnerable young adults were still inappropriately located in the segregation unit, because there was no alternative provision in Wales.
However, the report said relationships between staff and prisoners had improved, although staff still lacked the training and confidence to engage positively with prisoners or challenge them.
Dame Anne said: "As at the time of the previous inspection, there are two key weaknesses that need to be addressed. One is internal: the need to train, support and equip staff properly to engage with and challenge the prisoner population.
"The other is external: Parc is Wales' only generic training prison and at present it is unequipped to perform that role. Welsh prisoners therefore either need to leave Wales, or to miss out on the education and training opportunities they need in order to increase their life chances outside prison."
Juliet Lyon, director of Prison Reform Trust, said "'doing time' should not mean wasting time".
"Parc, a training prison with just 70 full-time education and 289 work places for an expanded population of 1,200 men and young offenders, cannot hope to prepare prisoners properly for release or do its job to cut appalling re-offending rates."
G4S, which runs the prison, said management and staff at Parc were working to address the issues raised in the report.
"A complete review of learning and skills provision will be completed by the autumn, and the increase in employment provision delivered as part of Parc's expansion programme will boost the vocational qualifications prisoners can access," said a spokesperson.