Health Minister Senator Ben Shenton has denied a so-called "Grand Prix" disciplinary system ever took place at a Jersey young offenders secure unit.
However, in a letter to States members about the Greenfields unit, he said a penalty and reward system at another facility had improved behaviour.
His letter claimed a new disciplinary regime which replaced this led to a deterioration of children's behaviour.
The minister has so far declined to comment publicly on the leaked letter.
Last month the Howard League for Penal Reform said the number of children being held in custody in Jersey was "unacceptably high".
'Diversionary' tactics
The prison charity had carried out a review of the island's care services after concerns were raised by the former manager of Greenfields, Simon Bellwood.
It said in England and Wales the proportion of youths held on remand as opposed to being bailed is about 20%. The figure in Jersey was about 80%.
Mr Bellwood, who was criticised by Mr Shenton in the leaked letter, described parts of it as "exaggerated and manipulated".
He said the minister was attempting to divert attention away from issues surrounding the island's youth justice system.
"It creates a diversion, which is exactly what he wants to do," Mr Bellwood told BBC News.
When Mr Bellwood was sacked in May 2007 after 10 months in charge, he took the States of Jersey to an employment tribunal, claiming he was unfairly dismissed for "whistle blowing". A settlement was reached in March this year during the tribunal.
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