When there's a distinct group of offenders inside a prison, it does create administrative problems. I used to do voluntary work inside our local prison, which had a men's unit and a women's unit. There were no men inside the women's unit, but in the men's unit there was a separate wing for sex offenders, who were under a different protocol.
From the Telegraph report, it doesn't look as if the men are incarcerated in cells with women. It looks as if any mixed-sex activities are limited and thoroughly supervised. Transwomen who look very feminine or who have had bottom surgery would indeed be at real risk in cells with other men. To me it's totally reasonable to keep them separate.
In an ideal world there would be a separate prison so that they wouldn't be in with women at all, but given the real world capacity for prisoners, it looks as if there is a concern for safeguarding for both women and transwomen. I don't believe transwomen are women, and from the Telegraph account it looks as if the prison authorities don't believe that either.