The report is based on the Office for Standards in Education's visits to 98 schools, using background information from 10,000 inspections during 1995-6 and 1996-7.
The arts play an important part in improving pupils' concentration and powers of enquiry, inspectors said.
"None of these subjects allows a passive response from pupils. Like professional artists, pupils must push forward the frontiers of their own work, reflect on and evaluate outcomes, and learn from their successes and mistakes."
The accuracy and consistency required is exacting. "There is no equivalent to correction fluid in many forms of artistic performance, or when working with some artistic media."
Inspectors emphasised how changes in the arts world influenced the teaching of the subjects .
"Many of the skills and much of the knowledge and understanding that need to be taught will be the same as now, but the ways in which they are applied may change to reflect the dynamic nature of the arts."
The report was a response to the previous Government's White Paper, Setting the Scene: The Arts and Young People, from the former Department of National Heritage, (now the Department of Culture, Media and Sport).
Virginia Bottomley, then the heritage secretary, wanted to put arts in the spotlight in the way her department had done for school sport with the publication of Sport: Raising the Game.
The OFSTED report is studded with examples of good practice in art, dance, drama and music.
In Hill primary school in Thurnscoe, Yorkshire, a former mining village with high unemployment, the headteacher "is determined to use art to raise pupils' level of self-esteem and recognise successful achievement".
The appointment of an art co-ordinator has led to high-quality work. A Year 6 lesson was inspired by a residential visit to Whitby where, using crayons, pupils drew shells and pebbles. Back in class, they painted pictures based on the drawings, which then formed the starting point for embroidery with patterns made on computer.
At Hextable school, Swanley, Kent, inspectors found excellent extra-curricular dance clubs for all year groups.
The sixth form organises its own dance event from choreography to publicity. This year they are performing the musical, Grease, in local feeder schools.
At West Derby comprehensive school for boys in Liverpool, a Year 10 GCSE group prepared and performed a 25-minute piece on the theme of changing attitudes to violence which was presented at an education authority conference held at Liverpool Football Club.
"The presentation was remarkable for its seamless integration of drama skills and conventions, including flashback, repetition, still image, mime and thought-tracking," said the report.
At Highfields School, Wolverhampton, Year 7 pupils worked on the theme of water, composing their own music using percussion to show control of texture, tempo, dynamics and pitch.
Jim Rose, OFSTED's director of inspection, said the report "amply illustrates the benefit of a rich arts curriculum for all pupils and the commitment of teachers to achieving high standards".
National agenda for the arts, Platform, page 25 The Arts Inspected: Good Teaching in Art, Dance, Drama and Music, Heinemann Educational, PO Box 380, Oxford OX2 8BR, pound;14.99. OFSTED intends to produce an appendix to this report including examples of pupils' work, on its web site: http:www.ofsted.gov.ukNational agenda for the arts, Platform, page 25