Anne Owers, chief inspector of prisons in England, said that to some extent the development of children held at Dungavel was at greater risk than in the past because arrangements for educational links and provision had been allowed to lapse.
The centre, which holds failed asylum-seekers before deportation and is the only one of its kind in Scotland, has been the focus of campaigns by churches, political parties, children's charities and education bodies over its treatment of children.
Jack McConnell, First Minister, has consistently argued that immigration is not a devolved issue and as such the Scottish Parliament does not have a locus.
An inspection in 2002 found that despite efforts to deliver a good standard of care, the welfare and development of children was compromised by detention. The lengthier this was, the greater the risk. At that time, the prisons inspectorate called for independent assessments of children's welfare.
In the report published this week, Ms Owers states that it is "extremely disappointing that no progress has been made in relation to independent assessment of the welfare and developmental needs of the children who were held in Dungavel at the time of this reinspection".
She adds: "Indeed, to some extent, the development of children was at greater risk as educational links and provision had been allowed to lapse during the months when the centre did not hold any children, and this required urgent attention.
"This deficit was not the fault of the local social work department, or the centre staff - who, unlike at other centres we have inspected, had a good and positive relationship with one another and were eager to work together to ensure the safeguarding of detained children.
"It was due to the Immigration and Nationality Department's lack of engagement with proposals to provide independent assessments which would feed into decisions about the appropriate care of children." At the time of the unannounced inspection in December, eight children of primary school age and under were being held, four of whom had been there for two weeks.
Tony McNulty, Home Office Minister, said that in normal circumstances children should not be kept at Dungavel for more than three days. He would respond to the chief inspector's recommendations once he had studied the report in full.
Linda Fabiani, SNP MSP and deputy convener of the Scottish Parliament's cross-party group on refugees, said: "The Scottish Executive must now tell the Home Office that it is not acceptable that these children are being failed on Scottish soil and demand action now."
Ronnie Smith, general secretary of the Educational Institute of Scotland, repeated the union's demand that children should not be held in detention and should have access to a proper education.