A report found there was “some evidence” that prisoners recalled on licence were trafficking drugs into HMP Hull.
But HM Inspectorate of Prisons said there was “no clear strategy for identifying them, assessing the risks or taking action”.
The watchdog recommended that the risk of trafficking posed by recalled prisoners should be assessed and procedures introduced to mitigate it.
Offenders serving the remainder of their sentence in the community can be recalled to prison if they breach the terms of their release.
In a speech earlier this year, Justice Secretary David Gauke warned that gangs were engineering situations where prisoners deliberately breach their licence conditions so they are sent back inside to smuggle in more drugs.
The inspection report on HMP Hull said risks to the jail included the availability of drugs and mobile phones, and associated violence.
A comprehensive supply reduction strategy identified the likely routes into the prison and a range of steps had been taken that had led to “regular finds”.
The inspectorate, which visited the jail in March and April, said the introduction of a dedicated search team enabled swift action to be taken in response to intelligence. Electronic drug testing equipment had also been introduced at the prison.
In other findings, the report said five prisoners had taken their own lives since the establishment was last inspected in 2014, and levels of self-harm had increased “drastically”.
Overcrowding was a problem, with two-thirds of prisoners sharing cramped cells. There was also a backlog of much-needed repairs and many facilities were in poor condition.
However, the assessment concluded that the prison was working well compared with most other local jails.
Overall, Chief Inspector of Prisons Peter Clarke described the report as “encouraging” and said HMP Hull is “a prison doing its best”.
A Prison Service spokeswoman said: “Drugs have no place in our prisons and to prevent smuggling we are improving searching techniques and investing £30 million in prison security including a rollout of airport-style body scanners.”
Michael Spurr, chief executive of HM Prison & Probation Service, said: “I’m pleased that this report recognises the good work being done by the Governor and his staff at HMP Hull, who deserve considerable credit for the progress made.
“We take deaths in custody incredibly seriously and are introducing a new system to ensure each prisoner has dedicated support from a specific prison officer.”
HMP Hull held just over 1,000 male inmates at the time of the inspection.