The decision was made based on fears surrounding the PS3’s Wi-Fi functionality and its ability to share data with Sony’s handheld PSP.
"Advice was issued to all prisons in December 2005 that the Sony PlayStation 3 was barred from the prison estate because of the equipment's ability to send and receive radio signals," said John Reid, in a response to shadow secreatery David Davis’ recent querying of Home Office regulations concerning the use of games consoles.
Back in June 2006, it was reported that PS2s had been banned from UK prisons due to inmates watching porn.
The PlayStation 3.

Sony's PlayStation 3 Entertainment System has been banned in British prisons. One of its key features is built in Wi-Fi which has the ability to send radio signals. To prevent prisoners from sending messages about jail breaks and other possible violations, it has been banned.

"The Sony PlayStation 3 was barred from the prison estate because of the equipment's ability to send and receive radio signals," said British Home Secretary John Reid.

The PlayStation 3 was launched in the United Kingdom last month. A similar ban was put in for Sony's PlayStation 2 which was alleged that inmates could use it to look at pornography.