18-year-old Courtney Meppen-Walter had accidentally been released early on Monday after serving just a quarter of his 16-month sentence for causing death by dangerous driving.
The Prison Service realised its mistake and notified police and the former England U18 captain is now back behind bars.
Back in February Meppen-Walter admitted culpability for the crash on September 1 last year which killed brother and sister Kulwant Singh and Ravel Kaur, and he reportedly returned to prison in Lancaster voluntarily after police visited his home on Monday.
Police Sergeant Danny Byrne said: "Officers visited Meppen-Walter's address last night and returned him back to prison in Lancaster.
"We are speaking to the family of the victims involved in this case to keep them updated with what has happened and our thoughts continue to be with them at this difficult time."
A Prison Service spokesman confirmed that an investigation will take place to see what happened: "Releases in error are very rare and we take any incident extremely seriously. An investigation will take place into the circumstances that led to this release."
Ms Kaur's two teenage sons were also injured in the accident, which happened when Meppen-Walter's grandfather's Mercedes C220 hit a Nissan Micra as it emerged from a side street in Manchester.
The 16 and 17-year-old boys have been left orphaned by the accident, with their father reportedly killed in their homeland of Afghanistan, which led them to flee to Britain in 2001.
It was revealed that Meppen-Walter - who wept throughout proceedings - was speeding at 56mph in a 30mph zone, and that he had one previous conviction for driving at the same speed in a similar area.
In the aftermath of the accident he tried to help the victims, and was overheard crying "what have I done?". He is expected to be released after eight months although could be let out earlier with an electronic tag.
The former England U17 international was also banned from driving for three years. He has not made a senior appearance for City.
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