Use of the private finance initiative in the Prison Service has led to mixed results, according to a report from parliament's spending watchdog.

In some areas involving the private sector in running Britain's prisons has led to improved performance, the National Audit Office said.

But only one PFI prison has not been fined for poor performance.

The report, published on Wednesday, said that the seven operational PFI prisons are bringing benefits to the Prison Service.

The introduction of greater competition had prompted Prison Service management teams to improve standards to the point where they were now winning tenders against the private sector for the operation of prisons.

And better staff-prisoner relationships in privately managed prisons have helped the drive to improve decency in publicly managed prisons, the watchdog found.

"The experience of the prison sector shows that the use of the PFI is neither a guarantee of success nor the cause of inevitable failure," said NAO chief Sir John Bourn.

"Like other methods of providing public services, there are successes and failures and they cannot be ascribed to a single factor.

"PFI has brought some results which are encouraging and some which are disappointing. But what is clear is that competition has helped to drive up standards and improve efficiency across the prison system as a whole."

The report found that the best PFI prisons at Parc and Altcourse had performed as well as the best public prisons - Lancaster Farms and Swansea. But the worst PFI jail, Ashfield Young Offenders Institution, has been among the worst in the whole prison estate.

Overall performance against contractual commitments was described as "mixed".

With the exception of Forest Bank, all of the PFI prisons have incurred financial deductions from contractual payments for poor performance. The deductions tend to be highest in the first year of operation and then reduce over subsequent years, the NAO said.

The seven operational PFI prisons - Altcourse, Ashfield, Dovegate, Forest Bank, Lowdham Grange, Parc, and Ryehill - account for about five per cent of the prison estate and hold 5000 prisoners, around seven per cent of the total prison population.

Two further PFI prisons, at Ashford and Peterborough, are due to be built.