The policy of offering breakfast, after-school and holiday clubs to pupils is central to the Government's drive to close the attainment gap between rich and poor.
But more needs to be done to attract a diverse range of children, particularly those from ethnic minority families, inspectors said.
They also found that the impact of extended services on academic achievement is still not being properly assessed by schools or councils.
Local authorities rarely knew if extended services, which are key to delivering the Every Child Matters agenda, provided good value for money, since only a few gathered evidence of schools' activities.
By 2010, all schools are meant to offer a range of extended services, including wraparound childcare, parenting support and extra-curricular activities.
But, as revealed by The TES, last November around 100 clubs in poor and rural areas were forced to close at the end of last year as they could not find the money to sustain themselves.
Ofsted, which conducted its survey between September 2006 and March 2007, also found that uncertainties about funding, particularly for pre-school children's centres, threatened services and staffing. Of the 32 schools inspected, 13 were providing a full range of extended services and the rest were making good progress.
Almost all the schools provided a wide range of out-of-hours activities, which motivated children and developed new skills, the inspectors said.
Most schools, however, found it difficult to provide year-round care, as they will be required to do by 2010.
Noreen Collins, headteacher of St Columba's Roman Catholic Primary in a deprived area of Bolton, said: "I keep the cost of breakfast and after-school clubs down to make it possible for as many children as possible to attend.
"The clubs are popular and have helped introduce consistency and stability in children's lives.
"It has also helped single mothers get back to work because they know they can trust the school with their children."