The IoW College, which was declared by inspectors to have serious weaknesses a year ago, has raised standards in four of seven unsatisfactory areas.
At a re-inspection Further Education Funding Council inspectors praised the way the college is being restructured.
The college was given a Grade 3 rating - satisfactory but with strengths and some weaknesses - for governance, management, general resources, and engineering.
But quality assurance, science and maths are still assessed as Grade 4 as inspectors deemed weaknesses continue to outweigh strengths.
Principal John Parnham, who took over in September, said: "We have clearly turned the corner.
"That we have improved so much since the inspectors' last visit in ebruary 1999 is down to a lot of hard work by a lot of people.
"Our Grade 3s are a significant vote of confidence in the way the college is run and the conduct of its courses," said Mr Parnham.
The original report in February 1999 criticised the management of the troubled college, its results and the neglect of its facilities in the pursuit of a new complex.
In the latest report it is clear the college is now committed to remaining on its main site in Newport and to improving the accommodation there.
The new team of college governors also earned praise from the inspectors.
"The governors have demonstrated an increased understanding of, and commitment to, the measures necessary to secure the financial stability of the college and to meet more effectively the education and training needs of the island community," the inspection team said.