Only 55 per cent of the inmates at Wandsworth prison were able to attend classes for which they were scheduled, said the report.
It found that education and other activity resources were "wasted" because inmates were locked up and unable to attend, arrived late, or transferred to another jail before completing qualifications.
The chief inspector, Ann Owers, cited education as just one aspect of conditions at the prison that has deteriorated since it was last inspected 16 months previously.
She said there was "serious concern" about standards at Wandsworth in the four main areas of inspection - safety, respect, purposeful activity and resettlement. She made 149 recommendations for improvement.
The prison was holding inmates in even more cramped conditions because of the ever-rising prison population, the report said. There had been some improvements, for example in the induction process and access to showers and phones.
But Ms Owers added: "On all our other indicators, the prison had in fact slipped back since the last inspection."
The "underlying culture" at the category B jail had not been addressed and some staff were "actively disrespectful" to the 1,400 prisoners, the watchdog found. While there was no evidence of "actual intimidation" it was rare to see warders engaging with inmates, she added.
Prisoners said they felt less safe than at other local prisons, with 35 per cent claiming they had been victimised compared with 23 per cent elsewhere.
Inspectors also noted that "racist language and action were commonplace and often went unchallenged".
"Control and restraint techniques were often used inappropriately in response to relatively minor incidents," said the 150-page study.
Michael Spurr, Prison Service director of operations, said: "Like many local prisons Wandsworth has had to operate at maximum capacity during a period of significant population pressure."