Segregation should also be limited to no more than 30 days and should not be used as an alternative to the disciplinary process, Correctional Investigator Howard Sapers said.
In the last year, there has been some progress, Sapers noted.
Howard Sapers hold a news conference in Ottawa on March 7, 2013. (Photo: The Canadian Press)
There been a dramatic reduction in the number of segregation placements and repeat placements because the policy is being better administered, he said.
"The average daily count in segregation cells across the country used to be around 800," Sapers said. "Today it is around 500 and that's without legislation change."
Though the number of people put in solitary has been reduced as a result of recent action by the Correctional Service of Canada, segregation is still often used to manage the mentally ill, the self-injurious and suicidal inmates, Sapers added.
"As my office's recent review of prison suicides documented, segregation was found to be an independent factor that elevated the risk of inmate suicide," he said.
"In fact, 14 of 30 prison suicides between 2011-2014 took place in a segregation cell. Nearly all of these inmates had known mental health issues."
The fact that these inmates found the means and opportunity to end their lives in what is supposed to be one of the most closely watched and most secure parts of a prison represents a serious operational risk, Sapers added.
He said the law is clear that segregation should be used sparingly and only when alternatives have been exhausted, noting the framework needs to be significantly reformed and not just tweaked.
"Segregation has become so overused in our penitentiaries that during the last reporting period, 27 per cent of the inmate population experienced at least one placement in administrative segregation," he said.
The investigator also flagged the issue of the disproportionate rates of incarceration for aboriginal people.
Aboriginal inmates most likely to be classified as maximum security
The report outlined how aboriginal inmates are more likely to be classified as maximum security, to spend more time in segregation and serve more of their sentence behind bars compared with non-aboriginals.
First Nations, Inuit and Metis offenders currently make up just over 25 per cent of the federal prison population, even though they represent just 4.3 per cent of the population, the study noted.
The overall aboriginal population in prison has ballooned by 50 per cent in the last decade, the report added.
"The growing disparity in correctional outcomes for indigenous offenders will need to be significantly narrowed," Sapers said.
"We know that a history of disadvantage follows indigenous people of Canada into prison and often defines their outcomes and their experiences."