The public spending watchdog has ordered the Prison Service to review the way it buys supplies.

A report by the National Audit Office (NAO) released on Friday said the agency could save £12 million a year by cutting the amount of supplies it holds in stock.

The Prison Service spent £461 million on essential supplies such as prisoners' food, clothing, and drug and educational programmes last year.

It managed to save more than £5.7 million by ordering some goods centrally but the NAO warned many prisons have yet to make the necessary changes that could bring major savings.

Even taking into account a fluctuating prison population the watchdog concluded stock levels could be cut to around a maximum of three months' supplies.

It also highlighted that in many prisons there is often no single person with authority for procurement other than the governor.

The NAO was critical of the lack of a single IT system for buying goods and services.

Sir John Bourn of the NAO said there was room for improvement despite success.

"The Prison Service has done well to improve its purchasing of goods and services in recent years," he said.

"But further financial savings can be achieved by streamlining procurement activities, reducing stock levels and maximising the benefits of the service's purchasing power through central contracts and locally negotiated contracts covering several prisons.

"The weaker performing prisons need to learn from the success of the best."