Attempts to reform prison education have "failed in almost every respect", says a damning MPs' report.
Funding was directed to the wrong places, a quarter of prisoners never had their education needs assessed, and more must be done to ensure ex- prisoners have skills that could gain them a job, it said.
Failure to keep proper records and lack of a common core curriculum also meant prisoners who were moved around the country had their education disrupted, said the Commons' public accounts committee.
Edward Leigh, its chairman, said: "A large proportion of prisoners and offenders serving community sentences have a desperate need of improved learning and skills if they are to get a job on release. Half of those in custody have no qualifications, and nearly 40 per cent have a reading age lower than that of a competent 11-year-old.
"But progress has been stymied both by inadequate joint working between the bodies responsible for delivering learning and skills to offenders and by failures in the delivery process itself. The Offenders' Learning and Skills Service was set up to overcome long-standing problems. In practice, it has failed in almost every respect."
The report said the skills service introduced in 2006 across England, intended to provide a consistent educational programme based on early assessment of prisoners' needs, had fallen short of its stated aims.
The education bodies and prison and probation agencies had conflicting priorities that stood in the way of providing a good service, the report said. It recommended they should agree joint targets and said that more prisoners should be screened and assessed, including those serving community sentences, in line with the service's original requirements.
Future contracts for prison education should also include a requirement to boost attendance among those who most need qualifications in order for providers to claim payment, MPs said.
At present, providers could pack courses with well-qualified prisoners who were easy to teach, rather than targeting those most in need.
But the Department for Innovation, Universities and Skills said the service was improving.
Sion Simon, the further education minister, said: "Far from failing, the Offenders' Learning and Skills Service has made significant progress since its creation, with a solid growth in the number of offenders learning new skills.
"Nearly 40 per cent of prisoners in 2007-08 took part in training - up from less than 30 per cent before it was created. This growth comes alongside real improvements in the quality of teaching."
But Mr Simon conceded that the National Audit Office had made criticisms of the service earlier this year which the public accounts committee relied on for some of its conclusions.