The prison system is failing to make Victoria a safer place, with nearly one in two prisoners returning to jail within two years of release, a report has found.

There are calls for a drastic reform of the corrections system, with more focus on tackling the cause of crime and more services and programs for prisoners in jail.

Ombudsman Deborah Glass said in her report that "while the public is understandably horrified by violent crime, we cannot keep pouring funds into a correctional system that is not making us safer".

"If we continue in this way, current trends in both prisoner numbers and cost mean it will not be long before we have to make hard decisions between prison beds or hospital beds, better schools or more security."