Department of Health documents highlight the need for 'further and urgent expansion' in response to a surge in the numbers of unconvicted 15- and 16 year-olds being remanded into custody.
Coupled with proposals in the Criminal Justice and Public Order Bill - now going through the Commons - to extend court powers to enable children as young as 12 to be remanded, officials estimate about 170 new places are needed on top of the existing 265.
News of the expansion comes days after the independent Policy Studies Institute, in the first detailed study of persistent young offenders, called into question the government policy of locking up children.
The Home Office is planning to build five secure training units to hold 200 children, aged 12 to 14, with three or more convictions.
At a cost of about pounds 50m to build with running costs of pounds 2,000 per child per week, researchers concluded they would have little or no impact on the levels of crime and the money would be better spent on community punishments which tackled their offending behaviour.
The study of 531 persistent offenders found that most came from chaotic family backgrounds - half had had contact with social services and nearly 200 had required psychiatric help. Many regularly truanted and were disruptive at school and many were experienced users of drugs or alcohol.
Further, evidence from Northern Ireland, where a similar training scheme is running, suggests that over 80 per cent of the children will reoffend on release. While some of the young offenders went into custody with a low opinion of their behaviour, by the time they were released they were less ashamed.
Senior police officers have supported the Government's policy, saying communities need breaks from the children's criminal activities. However, Harry Fletcher, of the National Association of Probation Officers, said yesterday: 'Evidence suggests these institutions will confirm, not prevent, juvenile offending. The Home Secretary would be well advised to think again about the disastrous consequences of this policy.'
However, even before the legislation has come into force, the 'get- tough' policy of Michael Howard, the Home Secretary, has had an impact on the courts. There has been a 14 per cent increase in remands over the past four months and the prison population is rising at a rate of about 400 a week to 48,110 - with 214 now being held in police cells. Nearly 12,000 of these are remand prisoners, 60 per cent of whom will ultimately either be acquitted or given a non-custodial sentence.