One in 10 colleges inspected last year was found to be "inadequate" by the Office for Standards in Education, the inspectorate announced in its annual report published this week.
But the figure is a significant improvement on the previous year when one in five colleges were described as failing.
The Ofsted report said further education in colleges is "afflicted by persistent weaknesses" and it revealed that half of all colleges were found to have some unsatisfactory provision.
It singled out work-based learning for particular criticism, describing it as "a weak element of FE" and said provision is unsatisfactory in two-fifths of colleges.
It expressed concern that "many work-based learners make progress in the specialist elements of their programmes, but fail to achieve key skills qualifications".
It added that the most vulnerable are the least well catered for. The teaching of literacy and numeracy is often unsatisfactory, as is the quality of provision in independent specialist colleges. "Too many young people in young offender institutions and secure units fail to receive an education that meets their needs or prepares them for the transition from custody to the community," it added.
Fewer colleges were found to have unsatisfactory leadership and management, but these were unsatisfactory in one in 10 colleges. The proportion of colleges where leadership and management are good or better remains at about two-fifths.
The report added: "There is still too much unsatisfactory teaching, mainly in general further education colleges."
The Association of Colleges was relieved that the number of inadequate colleges has halved.
"We think colleges do a very impressive job for a great many people, many of whom have not succeeded in the schools system," said Judith Norrington, Association of Colleges director of curriculum and quality. "The sector can always do better, but we should look at the value that has added to many people's lives by their further education, and we should celebrate their success."
Ofsted and the Adult Learning Inspectorate inspected 86 general further education, tertiary and specialist colleges and 19 sixth- form colleges in 2002-03. The number of sixth-form colleges inspected was smaller than in the previous year.
The inspectors found that most provision in colleges was at least satisfactory, and there was much more good or very good practice than there is unsatisfactory.
It added: "However, further education in colleges is afflicted by some persistent weaknesses. Half of all colleges have some unsatisfactory provision, but often this provision affects a minority, sometimes a small minority, of learners.
"Also, the incidence of unsatisfactory provision in 2002-03 is lower than in the previous year. There is less unsatisfactory teaching.
"There are, however, as yet, no convincing signs of significant overall improvement in the college sector. Across the colleges inspected in 2002-03, there is less unsatisfactory provision than in the previous year."
"There is a marked difference in quality between general FE colleges and sixth-form colleges. Sixth-form colleges continue to be consistently successful providers of 16-19 education."
The report described the most common failing of college management as "the performance of its core function of ensuring and sustaining the quality of teaching and learning".
The report also found that:
* FE colleges are having some success in widening participation among groups that are not traditionally engaged in education.
* Unsatisfactory attendance continues to hold back students in general FE and sixth-form colleges.
* Modern Apprenticeship completion rates are too low.
* Two-thirds of people who start foundation apprenticeships in retailing, care, hairdressing and hospitality do not get key skills qualifications.
* Visual and performing arts and English, language and communication remain the strongest areas.
* Construction, engineering and ICT are relatively weak.