Schools and local authorities face a huge bill following a change in the law which means they must now take responsibility for the education of young offenders.
For the first time, children in custody will get the same rights to schooling as their peers once the Apprenticeships, Skills, Children and Learning Bill, currently being debated by MPs, completes its passage through Parliament.
The legislation gives councils with detention centres or young offender institutions a new duty to secure and fund suitable education for inmates.
But the Local Government Association (LGA) has warned that this could be a costly change.
As young prisoners will now have to follow the national curriculum, the LGA claims schools and colleges are likely to bid to run the new education services.
Education for juveniles in custody is currently provided in different ways across the country. Following the legal changes, local authorities will have to collaborate with other organisations to come up with plans for the children's lessons and then submit them to the new Young People's Learning Agency for approval to ensure that plans are consistent nationwide.
If prisoners are placed in a different local authority area while in custody, their "home" council will have a duty to promote their educational attainment to make sure they continue to study after being released.
Most of those in custody are sent to open or closed young offender institutions or privately-run juvenile detention centres.
According to the Youth Justice Board, more than half of young people on detention and training orders (DTOs) have literacy and numeracy levels below those expected of 11-year-olds, although their average age is 17.
Government targets for this academic year say 90 per cent of all young offenders should be in suitable full-time training or employment. Those in young offender institutions should receive 25 hours of education a week.
Clive Grimshaw, a policy consultant for the Local Government Association, said local authorities are anxious to make sure the changes to the law are fully funded, as promised by the Government.
"The cost of educating young offenders is likely to rise as specialist workers will have to be employed and the hours of lessons they get increase," Mr Grimshaw said.
"We think this might lead to staff from young offender institutions talking more to local schools and colleges and local authorities perhaps giving the contract for the education services to them. This would make life smoother for the child as they could attend lessons there when they are released.
"This will raise the quality of education provision for young offenders. At the moment they have very low aspirations and quality of classes varies across the country.
"It also means young offenders with special education needs will get specialist help."
Prisoners' Education Trust director Pat Jones said that, despite the legislation, security concerns hold back young people's progress.
"The legislation is good, but in practice almost impossible - children in units don't get the same chances to use computers or the internet or have the same access to books and resources or tutors for distance learning," she said.
"We need to get past these security issues."
Younger offenders are sent to local authority-run secure units, where they are taught by trained teachers. Principals of secure units argue this means they are the best place for children in custody.
Mary Graham, principal of the Atkinson Secure Unit in Exeter, said intensive support is the best way of preventing re-offending.
CHILDREN BEHIND BARS
- The number of under-18s in prison rose from 2,900 in June 2000 to 3,500 two years later. Levels fell to 3,200 in June 2003 and remained constant until last summer, apart from a slight rise in 2006.
- During December 2008, the under-18 custody population decreased by 190 to 2,715. The number of children and young people being held securely, including 18-year-olds, fell by 146.
- There are 2,557 boys in jail compared to 158 girls.
- Most of these under-18s - 2,327 - are held at young offender institutions, but 215 are in secure training centres and 173 in secure children's homes.
- 1,604 have been given detention and training orders, 574 are on remand, and 407 were given various sentences by Crown Courts.
- A total of Pounds 63 million was spent on educating young offenders in 200607 compared to just Pounds 18.5m in 200102.
- Youth Justice Board figures show that Pounds 8,100 was spent on education for each juvenile in young offender institutions in 200607 compared to an average of Pounds 3,500 to Pounds 5,000 for each secondary school pupil.