An inspection by the watchdog, an independent public body, found that the Fresnes prison, 15 kilometres south of Paris, was filled to twice its capacity.
Inspectors noted that hundreds of the jail's ten-square-metre cells, designed for one person, were instead occupied by three inmates.
Understaffing and overcrowding, coupled with “disastrous hygiene” conditions, contravened European Court of Human Rights criteria and endangered the health of prisoners and guards, the report said.
Tensions frequently simmered over, the watchdog said. Wardens often used violence and fights among prisoners were also commonplace.
In its recommendations to the justice ministry, the watchdog said the abysmal conditions at the Fresnes prison were in urgent need of redress.
The inspectors' findings came two months after campaigners filed a complaint against the French state, denouncing the overcrowding and filthy conditions in the prison.
The French-based International Prisons Observatory (OIP) backed its complaint with statements from inmates at Fresnes prison.
"We are infested with bedbugs, bitten every night on the face, on the neck, the shoulders, the back, the legs and the arms," said one inmate, in documents seen by AFP.
Another prisoner described the stench of dead rats, while another said he had to share his cell with up to 300 cockroaches.
The OIP has previously warned about overcrowding in French prisons, where the number of inmates soared this summer to 68,819 people for 58,507 places.
The government has also announced a major building programme to tackle the overcrowding problem.
The OIP said conditions were particularly bad at Fresnes, where 2,800 inmates are crammed into a jail with a capacity of only 1,607.