He told the Centre for Crime and Justice Studies in London that reform of the justice system was needed to end "the revolving door of crime and reoffending". "This means prisons that are places of punishment, but also of education, hard work and change," he said.
Prisoners not given access to education in custody are up to three times more likely to reoffend, according to a 2002 report by the Social Exclusion Unit. Among young offenders, 68 per cent of those released in 2004 were reconvicted within a year.
Mr Clarke's speech comes as colleges get increasingly involved in educating teenage offenders under youth rehabilitation orders, as an alternative to custody. At Barking and Dagenham College, this has expanded to include apprenticeships.
Bob Williams, vice-principal at the college, said: "A judge or the bench will say you need to be in education, because you're 16 or 17, and so we get some learners that are tagged and on probation. If they can find employment, then it works. But that's harder now."
Half of all offenders lack the skills for 96 per cent of jobs, and a similar proportion fails to meet the average reading level of an 11-year- old.
Funding for offender learning belongs to the Department for Business, Innovation and Skills. A National Audit Office report earlier this year said that half of the 60,000 prisoners serving short sentences undertook no work or education in prison, and only a fraction of the budget was spent on them.
The largest prison education provider, The Manchester College, introduced a pay freeze last year amid concerns its contracts were not financially viable.