There has been little progress in improving the education of inmates, despite the transfer of responsibility from the Home Office to the Department for Education and Skills four years ago.
The report, by the Commons education select committee, said: "Despite the creation of the offender learning and skills unit within the DfES, there is little sense of ownership of prison education, no high-profile champion within the DfES and no drive or energy in moving things forward.
"In spite, or because of, all of these players, there is no strategic direction, and it is not clear where decisions about policy are made," it said.
Further confusion was created when Project Rex, the ill-fated tendering process to attract new prison education contracts, was scrapped in order to allow the Learning and Skills Council to take responsibility for the service.
The committee's report says there needs to be better coordination of education with other activities in jails, including work regimes which, unlike study, attract income for prisoners and competes for their time.
The wider prison environment is harmful to education, says the committee, citing in particular the problems of overcrowding and the constant movement of inmates between prisons.
MPs say prison officers' training also needs improving if prison staff are to work effectively with their education colleagues. Their initial training lasts eight weeks - which, the report says, is "too short".
The committee said the Government's prison education policy, which emphasises basic skills, is "based on little more than a hunch."
Nevertheless, the committee conceded basic skills deficiencies are common among offenders.
Most prisoners have no qualifications and 96 per cent have sufficient skills to qualify for only 4 per cent of jobs. Nearly a third of prisoners were truants from school.
Steve Taylor, director of the Forum on Prison Education, welcomed the report, which drew heavily on evidence given by his organisation.
He said: "The report shows that this diet of basic skills is not based on any measure of people's real needs and that education is about more than just training for employment but also for education for itself."
The Government is expected to publish a green paper later this year setting out its plans in response to the report.
The report concludes: "The transfer of responsibility to the DfES in 2001 has not yet achieved a significant increase in the priority given to prison education."