The standard of Welsh-language teaching in English-medium schools is getting worse, according to Estyn.
Just less than two-thirds of schools inspected last year had shortcomings, compared with half in the previous two years.
Only one in five of the English-medium schools inspected had good bilingual provision and Welsh as a second language remains one of the worst-performing subjects at both primary and secondary level, the report found.
Bill Maxwell, chief inspector of education and training in Wales, said that although progress is good when pupils start school and begin learning Welsh as a second language, standards soon slip.
He said he hoped the Assembly government's Welsh-medium education strategy, launched last year, could help improve the situation.
Bilingualism is strong in traditionally Welsh-speaking areas, but weaker in more anglicised areas, particularly the south-east. Schools in those areas continue to face difficulties recruiting suitable teachers.
But Welsh as a first language is still one of the top-performing subjects. Rebecca Williams, policy officer for the Welsh-medium union UCAC, said the difference in the two pointed to a gap in the workforce that must be addressed with more training and professional development opportunities.
"There must be a serious review of how Welsh as a second language is taught, and a major overhaul of the subject is needed before it gets where it needs to be," she said.
"The Welsh-medium education strategy is a start. It makes a lot of sensible suggestions and points us in the right direction. It was desperately needed and the sooner it's implemented, the better."
The strategy calls for every trainee primary teacher to learn Welsh to help raise standards.