Value for money is good, its contribution to school improvement is good and its focus on outcomes is very good, according to a report by the inspection service itself and education researchers.
Four out of five heads and two out of three teachers say the benefits of their inspection outweighed the negatives. The report identified "considerable evidence" that inspectors have raised standards in schools and improved teacher training over the past decade.
Policy advice to ministers and improvements in schools in special measures were also praised in the report, produced by Ofsted and London university's institute of education.
But Ofsted's self-evaluation paints a rosier picture than an unpublished staff survey revealed by The TES in April. This found that one in five Ofsted staff had been bullied or harassed while at work and one in three wanted to leave.
The self-evaluation did identify areas for improvement. Many middle-ranking schools do not do enough to implement inspectors' findings and inspectors should learn from Scotland where follow- up visits from inspectors inspire heads to take action, it said.
And although 90 per cent of heads and chairs of governors are satisfied that their inspection was fair, further research is needed to ensure judgements are consistent and reliable.
David Bell, chief inspector of schools, said: "I'm pleased that the findings from today's report are so positive. However, no organisation is perfect and we must look at the weaknesses that have been identified so as not to become complacent in our work."
David Hart, general secretary of the National Association of Head Teachers, said: "This does not square with the concerns expressed by members." The inspectorate still had weaknesses, including an inadequate complaints procedure, he said.
Chris Keates, acting general secretary of the National Association of Schoolmasters Union of Women Teachers, said: "Ofsted's somewhat self-satisfied and rather smug approach to the outcome of its self-evaluation is unlikely to enhance its credibility."