Penal reformers, who launch a campaign today to shame ministers into action, blame the increase on tough rhetoric used by politicians in the run-up to the general election.
And they warn that the toll of vulnerable children who commit suicide - 29 since 1990, including two this year - will continue to rise without a dramatic change of policy.
The number of children in penal custody stood at 3,423 last week, compared with 3,130 a year ago, research by the Howard League for Penal Reform has discovered. The number of girls locked up rose by more than a third over the period, from 198 to 267.
The majority - 2,933 - are held in young offender institutions operated by the Prison Service, with another 245 held in secure training centres run by private companies and 245 in secure local authority children's homes.
Last year Jaap Doek, chairman of the UN Committee on the Rights of the Child, denounced Britain for failing to respect the human rights of young offenders. He said: "The UK still locks up more children than most other industrialised countries. Why is this tolerated?"
The Government's Youth Justice Board (YJB) also set itself the target last autumn of cutting the number of children in jail by 10 per cent.
The revelation that the reverse has happened will embarrass both the YJB and its political masters in the Home Office. Privately, they both blame the increasingly punitive approach taken by youth courts.
Frances Crook, director of the Howard League, said: "Ministers should hang their heads in shame over this situation and act now both to reduce the numbers in custody and to end child deaths. We want no more families to mourn their lost children, no more staff to cut down a child's body from the prison bars, no more excuses."
She said initiatives such as the drives against street crime and antisocial behaviour had pushed the numbers up.
"When a judge is faced with a child in court they often take the easiest option available to them and sent the child to custody."
The Howard League is launching its campaign at the Labour conference in Brighton, where it plans to lobby Home Office ministers. A series of conferences on child custody is being set up and a national petition demanding action on the issue is being collected for presentation to Downing Street.
A YJB spokesman put the increase in custody of under-18s - the Howard League's figures included some 18-year-olds - at closer to 4 per cent, but did not dispute that there had been a significant rise.
He said: "There will always be some children and young people who need to be held in custody because of the seriousness of their offence, their offending history and the need to protect the public.
"The YJB does believe, however, that custody for children should be used genuinely as a last resort."
He said robust community alternatives to detention were being developed in which sentencers could have full confidence. Fifteen years ago Tory ministers expressed their determination to push down the numbers of children in custody but the mood changed after the murder of two-year-old James Bulger in Liverpool in 1993.
The YJB hoped the number had peaked at about 3,500 in mid-2002. But the trend reversed about 18 months ago and the number is increasing again, with little sign of a reverse.
There has been a series of suicides among juvenile offenders. Last year Adam Rickwood, 14, found hanged in his cell at Hassockfield secure training centre, County Durham, became the youngest prisoner to hang himself in custody.
Two more boys have died behind bars this year, including Sam Elphick, 17, who was found hanged at Hindley Prison, Lancashire, earlier this month.
Ann Owers, the chief inspector of prisons, has expressed concern over the some of the techniques used to restrain young people in custody.
Adam Rickwood, 14: Troubled teenager with a history of self-harm
Adam Rickwood is the youngest person in British penal history to die in custody and his death, 13 months ago, was typical of those in detention centres.
He had been a self-harmer since the age of 11 - overdosing on ecstasy tablets and scratching his wrists. He underwent psychiatric examination and was diagnosed as suffering from severe emotional problems. One in 10 children in custody has self-harmed.
The precise cause of Adam's distress was unclear but an 18-month period in which his two grandfathers and a grandmother died had a profound effect on him. A note he left after his death - which fills one side of A4 - referred to his "granddad Rickwood" and asked that he be buried with him. "I can't cope," it stated.
Crucial to the investigation into his death will be the conclusions of an assessment meeting for Adam held on 20 July last year - 20 days before his death - at Hassockfield secure training centre in County Durham, where he died.
His mother Carol Pounder, 37, claims she revealed details of Adam's self-harming to staff at the assessment meeting, during which concerns were raised by staff that Adam had spent too much time on his own in his room at the 2 Bravo house block at Hassockfield. Suggestions were also raised that he might have been picked on by other inmates.
Adam was certainly distressed to be held at a detention centre 150 miles from home. He was remanded into custody after allegedly wounding a man in Burnley, leaving him needing intensive care for a stomach wound caused by a bottle.
The criminal justice minister, Baroness Scotland, has been asked by the pressure group Inquest to explain why Adam's family is still at least a year away from receiving a formal explanation of his death.
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