A prison wing for low-risk inmates has been described by inspectors as the "worst establishment we have inspected in many years" following an unannounced visit.
The category D side of HMP Lindholme, near Doncaster in South Yorkshire, had been "forgotten and neglected" after funding lost when the wing was returned to the prison service in January 2012 was not replaced.
The Prison Reform Trust has called for 'immediate action' to address the serious problems at Lindholme
Among its findings, HM Inspectorate of Prisons (HMIP) said there were religious tensions on the wing and discovered someone had defecated in washing facilities for Muslim prayers.
Described as an "astonishing situation" by the inspectors, more than a third of prisoners interviewed had felt unsafe at some time, while drugs and alcohol were widely available on the wing, which was shut down shortly after the inspection.
There were also significant problems in other parts of the 1,000-capacity jail, which is one of a group of prisons in South Yorkshire set to be handed over to the private sector, the inspectorate said.
Chief Inspector of Prisons Nick Hardwick said: "The closure of the D side has reduced the immediate risks but legitimate prisoner grievances, the lack of activity, mixed staff-prisoner relationships and indications of some religious tensions, combined with the ready availability of drugs and alcohol, are an unhealthy mix.
"The uncertainty created by the prison's move to the private sector cannot be allowed to delay the urgent improvements that are required."
In the category C side of the jail, the inspectorate found that the needs of prisoners with disabilities were ignored, including a "distressed" disabled inmate who was "constantly taunted" and bullied for payment if he had to ask for help.
Uncertainty created by the pending move to the private sector added to the difficulty in running the prison, HMIP said. However, it added that these difficulties "did not excuse the very poor findings of this inspection".
Elsewhere, inspectors were concerned to find that reception, first night and induction arrangements on the low-risk wing, which was an immigration removal centre until January 2012, were done with minimal effort.
There was no work or education available on the D wing, apart from a few domestic duties, and it was difficult for prisoners to see a doctor if they were unwell.
Elsewhere in the prison, which is on the site of a former Royal Air Force base, black and minority ethnic prisoners reported more negatively than white inmates.
Michael Spurr, chief executive of the National Offender Management Service (Noms), said: "I accept that performance at Lindholme fell below an acceptable level in the period prior to this inspection."
He said the switch from an immigration removal centre back to the prison service was done to "too quickly with insufficient planning".
He went on: "We got this wrong and will learn lessons so it does not happen again. The wing is now closed and will not reopen without a full and proper regime in place.
"The governor (Marian Mahoney) has already taken action to address the main weaknesses identified in the rest of the prison. She will be provided with the support necessary to deliver the rapid and sustained improvement required."
Juliet Lyon, director of the Prison Reform Trust, said: "This disturbing report shows how quickly and how far a large and complex prison, facing an uncertain future, can go downhill.
"The Prison Reform Trust urges the Prison Service to take immediate action to address the serious problems identified by inspectors in the report."