Inmates at Cookham Wood were reduced to hiding in their cells and refusing to come out -even to eat - because they feared for their safety, the inspection report found.
Bullying was "rife" and relationships between staff and inmates were "tense".
The prison wa re-roled in May 2008 from a women's prison to a dedicated male juvenile institution but the inspectors blamed managers for an 'over-ambitious' programme to fill the estabishemnt before it was ready.
The chief inspector called for a cap on the number of youngsters housed there until the problems were fixed.
The report said:
We came across a number of young people on each unit who remained in their cells, refusing to go to education, dine out or associate with others, because they said they were being bullied or feared being assaulted or getting into a fight.
The inspectors uncovered "high" levels of force used by staff, mostly to stop fights between inmates, who are aged 15-18. The report also found that records of injuries caused to young people during restraint by staff were "inaccurate".
Juliet Lyon, director of the Prison Reform Trust, said:
This report raises serious questions for the Ministry of Justice and the Department for Children, Schools and Families about why we persist in locking up our most vulnerable and volatile teenagers in unsafe environments that are almost bound to make them worse, rather than developing alternative provision.
Phil Wheatley, director general of the National Offender Management Service, said:
As the chief inspector makes clear, the re-role of an establishment to hold a vulnerable population of young people is a difficult process.
Although I agree that the physical layout is not perfect for purpose, this needs to be balanced against our determination to ensure young offenders, largely from Greater London, are held closer to home than was previously possible, with all the advantages this brings for reducing re-offending and protecting the public through closer family and community ties.
Cookham Wood was the only realistic establishment of the right size to achieve this goal.
Since the inspection, significant improvements have been made and better safety and control have been established.
