The report by High Court Judge Brian Keith cited 186 failings which contributed to the slaying in 2000 of first-time offender Zahid Mubarek, 19, by his cellmate, Robert Stewart.
Keith found "a bewildering catalog of shortcomings, both individual and systemic" at Feltham Young Offenders Institution where Mubarek was held.
He recommended that the Home Office and the Prison Service should introduce a concept of "institutional religious intolerance" to combat prejudice against Muslim inmates.
Keith's report said there was a "real possibility" that a game called Gladiator did exist at Feltham in which prison officers placed unsuitable inmates together in the same cell to generate violence, though he found no conclusive proof.
Mubarek was serving three months for theft at Feltham Young Offenders Institution in west London on March 21, 2000, when Stewart, a white man with a long record of previous offenses, beat him with a table leg. Mubarek died a week later.
The judge said there was ample evidence available of Stewart's violent, racist tendencies, including his suspected involvement in an earlier killing of an 18-year-old inmate at another prison.
Stewart, now 25, a known racist who was later diagnosed as a psychopath, was jailed for life in October 2001 for the attack.
The killing sparked anger among human rights groups and a public debate about racism in prisons and prison reform.
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