It also emerged that Sue Edwards, 35, was refused permission to remain with her baby and had to return to jail less than six hours after her daughter, Sarah Louise, was born.
Mrs Edwards, who is serving a three-year sentence for burglary, remained chained throughout her stay at Wythenshawe Hospital, Manchester, even while she fed her baby. The hospital said yesterday that the two midwives who assisted in the delivery did not realise until after the birth that Mrs Edwards had been handcuffed.
The Prison Service has apologised to Mrs Edwards, but calls for government action grew yesterday as Labour demanded a review of the relationship between the medical prison service and the NHS.
The governor of Styal women's prison in Cheshire, where Mrs Edwards is being held, said the two women prison officers involved had taken too literally their instructions to keep the prisoner secure.
Mrs Edwards, from Ancoats, Manchester, was taken to hospital from Styal jail after she went into labour during a visit by her 14-year- old son.
She will claim compensation for the distress she suffered at the hospital. Roger Lowe, her solicitor, said: 'Mrs Edwards has instructed me to pursue legal action against the Prison Service. It will be breaking new ground so we don't know exactly what form it will take . . . it could well be we will go to the European Court of Human Rights.'
Mr Lowe said Mrs Edwards, whose baby is being cared for by her sister, was still distressed by what had happened.
Medical experts and prison reformers yesterday condemned Mrs Edwards' treatment - which happened on Christmas Eve but was revealed only on Wednesday - and warned it could severely affect her relationship with her child.
A panel of medical and prison representatives refused Mrs Edwards' request to remain with her new daughter and for her to be kept at the prison's baby unit.
Janet Jones, an aunt of Mrs Edwards, said yesterday her niece was upset that prison authorities and social services would not let her keep the baby. 'I couldn't believe how quickly they took her back from the hospital. There was a lot of bruising on her stomach from the birth and she was really worried there was something wrong inside. The way she has been treated is outrageous.'
A hospital spokesman said: 'It was only after the child had been born and the midwives were changing the sheets on the bed that they realised the mother was handcuffed to a prison officer. Had they known earlier and thought the handcuffs were in any way restricting her movement, they would most certainly have protested.'
He added: 'The prison staff should have used their discretion. In future we will talk to the prison authorities so the situation is clear.'
Mrs Edwards had a record of absconding and during her pregnancy staged an escape from the hospital's maternity unit. She is due to be released from prison in July.
She now has five children, and for 14 years has lived with her partner, Keith, 43.