Ashworth Hospital Authority has agreed plans to end the 'shocking' history of 'confusion, indecision, mismanagement and incompetence' identified by the Fallon inquiry.
But one of the report's key recommendations - to cut the number of patients on wards in the hospital's personality disorder unit by more than half - has not been taken up by the board.
An action plan agreed by the board on Tuesday responds to 39 recommendations in the inquiry led by judge Peter Fallon, which found widespread use of drugs and pornography and evidence that a child had been 'groomed for paedophile purposes'.
Health secretary Frank Dobson did not accept the inquiry's central recommendation that Ashworth should close, and appointed Ian Pirie as chair with four months to draw up the action plan.
Changes already implemented include visitor searches - soon to be followed by staff searches - a ban on all visitors aged under 18 who are not close relatives of patients, the end of patient shops on the wards and restrictions on the use of personal computers and videos.
Of the 16 staff singled out for criticism in the report, just three remain at the hospital.
But the plan shows a reluctance to comply with the recommendation that the personality disorder unit should cut the number of patients per ward from 25 to between eight and 12.
It identifies 'significant' spending implications for such a restructuring, and warns that the lack of psychiatrists and psychologists 'would be compounded' by it.
The action plan describes the current management of the PDU as a 'well established' treatment model strengthened by recent appointments.
The board also showed concern over the Fallon inquiry's recommendation to relocate all senior managers in the hospital's secure area, at an annual cost of£116,000, plus£875,000 capital costs.
Several key staff have already been transferred to the secure area, but the plan argues: 'Additional change would increase the volume of movement though the North Lodge and increase the pressure on security arrangements.'
See cover feature, pages 20-22; feature, pages 24-25.
Ashworth Hospital Authority Action Plan in Response to the Recommendations of the Report of the Committee of Inquiry into the Personality Disorder Unit at Ashworth Special Hospital (the Fallon report). 0151-473 0303. Free.