The review comes only days after a mother in Holloway prison, north London, took the service to court after her newborn child was taken from her when she was denied a place in the jail's mother and baby unit.
Richard Tilt, director- general of the Prison Service, said the review would look at the very principles of holding mothers and babies in prison.
The review comes as the Prison Service is facing a series of other legal challenges from jailed mothers. The next case likely to go to court involves a woman at Holloway whose baby was taken from her at the age of five weeks after the mother was removed from the unit.
The first legal challenge - brought by a woman known as Miss E - led to a climbdown last month by the Prison Service, which subsequently found her a place in a mother and baby unit at Styal prison in Cheshire.
Mr Tilt said the the review would look at the number and type of facilities on offer to mothers and babies, as well as the process of allocating places inside units. It will consider how long babies should be able to stay with their mothers.
The policy governing mother and baby units has not been reviewed since the first one opened in 1966. There are four prisons offering a total of 64 places in the units.
Mr Tilt said: "I believe it is now time to conduct such a review to look again at the principles of holding mothers and babies in prison, operation of the units and specifically the admission criteria and procedures."Reuse content