Growing inmate numbers, overcrowding and staff cuts have fuelled a 46% rise in suicide rates over the last three years, according to the Howard League for Penal Reform.
It said public sector funding is being spent on dealing with the aftermath of the deaths when it could be used to prevent them.
Two years ago an inquest jury found multiple failings by staff at Hindley young offender institution contributed to the death of a 17-year-old Jake Hardy, who had been bullied by other inmates.
Staff were accused of failing to give Jake proper support before he hanged himself in his cell. He was taken to hospital but died four days later.
The teenager, who was serving six months for affray and common assault, had previously complained that he was being picked on and had said that he was better off dead, said the charity Inquest, which helps people bereaved by a death in custody.
An inquest jury at Bolton coroner’s court found that he had died as a result of his own deliberate act but that there was not enough evidence to prove he intended to kill himself, and they highlighted a number of failures at the youth jail.
The jury said staff failed to protect him and to investigate the bullying. The jury heard he had been allocated a personal prison officer who had not studied his record and knew nothing of his vulnerabilities.
This week, Frances Crook, chief executive of the Howard League for Penal Reform, said: “No one should be so desperate whilst they are in the care of the state that they take their own life.
“Similarly, when conditions in prisons are so dire that people are taking their own lives at a rate of one every four days, no one should have to rely on economic analysis to make the case for change.
“Nevertheless, today’s briefing paper shows how greater investment in suicide prevention would make financial sense, generating savings for public services that would benefit everyone.”
The charity took the cost of a suicide in the community and estimated the additional costs that are generated by a death in the penal system, including investigations by the prisons ombudsman and the coroner, legal representation for prison staff and contributions to funeral costs.
It estimates that the cost to taxpayers is between £160m and £300m a year.
Andy Bell, deputy chief executive of the Centre for Mental Health, said: “Every loss of life due to suicide is a personal and family tragedy. This new report also demonstrates the wider costs of suicide deaths in prison.
“It is a reminder of how important it is to take action to protect the mental health of all prisoners and to ensure people with mental health difficulties are offered help as quickly as possible when they come into contact with the criminal justice system.”
It comes after Prime Minister David Cameron announced plans to overhaul the way prisons are run, with governors given greater freedom over the day to day running and the introduction of performance league tables.