A chronic lack of places for young offenders in Wales means nearly three-quarters are sent to units in England - sparking concerns they are too far from home and separated from their language, culture and education.
But places at HM Parc Prison, Bridgend, are to double by the end of the year as the Assembly government and the Youth Justice Board work on "creative" ways of tackling the shortage.
At any one time around 190 10 to 17-year-olds from Wales are sentenced or remanded to secure accommodation, but there are only 50 places in the country - 14 at Hillside secure children's home in Neath and currently 36 at Parc.
The expansion at the privately-run Parc Prison was announced at last week's annual Youth Justice Board (YJB) conference in Cardiff.
Board chairman Professor Rod Morgan said: "Young people from Wales are ending up in England. But we are creating more spaces at Parc and and are hoping to develop more places."
First Minister Rhodri Morgan told delegates: "The Assembly government has concerns about inadequate provision of juvenile secure accommodation in Wales. It is hoped some progress will be made regarding capacity this year."
Small community-based units for youngsters under 18 are also being looked at, he added.
"Where secure accommodation is necessary, the preference would be for small units based in the community wherever possible."
Dr Howard Williamson, professor of European youth policy at the University of Glamorgan and chair of the YJB's youth crime prevention and inclusion committee, suggested Wales might seek new alternatives.
"We've looked creatively at the middle ground. I can't reveal where we've got to, but I can say the Assembly government is looking at potential halfway houses, smaller units and the conversion of existing facilities.
"There are options to try which address the specifics of Welsh language and culture. A working party has been exploring these - then we have the challenge of who's going to pay. It's not devolved but, if the Assembly is supporting some innovation, it may need to release funds."
These ideas are the product of a working group established last year by social justice and regeneration minister Edwina Hart with the YJB.
Its findings have not been made public and are deemed "commercially sensitive" because expansion of Welsh youth custody is likely to involve the private sector.
But in a statement, the Assembly government said the report, "suggests that consideration be given to a number of options to increase secure estate capacity in north and south Wales".
"The options are a mix of new build and expansion of existing facilities."
Ms Hart said officials were working on these recommendations but more use should be made of "robust, properly administered community sentences".
Catriona Williams, chief executive of the charity Children in Wales, said she was concerned about children's isolation from Welsh education if they were placed in England.
"The main issues are linguistic and cultural and the importance of keeping within the Welsh educational system," she said.
"Many children regard education as their lifeline. They're stuck if they miss modules and practical work for some qualifications."
Sir Jeremy Beecham, who authored a review of Welsh public services earlier this year, said he was shocked to discover the shortage of dedicated youth custody facilities.
He said: "I think local government can be involved in this rather more effectively than the Prison Service. With local authorities involved the continuity with other services, such as education, would be reinforced."