Emmanuel, an independent day school for boys and girls aged three to 19, whose aims are to "shape students' character in line with God's will for their lives", was found to have failings in all key areas, including leadership, teaching and learning.
But headteacher John Spurrier-Davies said the school's curriculum was so different to the national one that was taught in state schools, that comparisons were difficult to make.
"There are obviously some things that we need to pull our socks up on and we will be doing so," he said.
"But some areas which we have covered are not available on the national curriculum, while other subjects that it has covered are ones we have not got to yet.
"We also don't see how you can compare a school with 16 pupils aged three to 17 with different key stages at state schools. The inspectors were trying to draw comparisons that were not easy to make."
The school, based at the English Baptist church in Abercarn's Commercial Road, was inspected in February. While Emmanuel's pupils were praised for their courteousness and good behaviour, they were said to have only a limited understanding of cultural issues and received little cultural enrichment through music, drama and art.
Estyn inspectors identified "important shortcomings" in standards at key stages 3 and 4, with pupils making less progress and attaining lower standards than expected in English and maths.
Other criticisms included a lack of confidence among pupils when reading and speaking, a failure to readily use numerical skills, poor standards in information and communications technology, and a failure of the school to inform the local education authority that a small number of pupils were frequently absent from school.
While the school's teaching supported and encouraged pupils and promoted good behaviour, the inspectors concluded that it did not provide a suitable level of challenge for independent learning.
The school has pledged to draw up an action plan addressing the findings before Easter 2007. Last year inspectors adopted an uncompromisingly tough stance over the Exclusive Brethren, a new evangelical Christian sect school in Swansea, where computers, television and sex education are prohibited.
And only last January, the Green Pastures Christian Academy, a privately-run Christian school in north Cardiff, came under fire for failing to meet any of the standards required of registered independent schools.
An Assembly spokeswoman said: "Independent schools can expect to be inspected at least every six years, and more frequently where there is cause for concern."