Newham, in London's East End, was hailed as a model for others for challenging assumptions that poverty and ethnic diversity led to failure at school.
Bury, the fourth smallest metropolitan authority in England, won acclaim for the "exemplary" support given to its 86 schools.
This week's inspection reports are easily the most positive of the local authority investigations published so far.
The praise was a fillip for councils who have been fighting to maintain a role. And David Blunkett, the Education and Employment Secretary, said:
"These reports show that local authorities are capable of doing a good job."
In both reports praise outweighs criticism, and Chris Woodhead, the chief inspector, said: "They should be seen as models of good practice."
The two authorities are vastly different. Newham is the country's most deprived borough and has a highly mobile, multi-ethnic population. Its schools are performing poorly, but improving rapidly.
Bury, to the north of Greater Manchester, has a profile closer to the national average and a predominantly white population. Its schools are getting steadily better.
According to OFSTED, both make highly effective use of money, are good planners, support literacy and numeracy, behaviour and attendance well and see their main job as underpinning the ability of schools to manage themselves.
Inspectors who visited Bury said: "The phrase 'the family of schools' was regularly used. Remarkably, it amounted to more than pious rhetoric, and did not preclude tough action where it was needed in the interests of pupils."
Newham, they said, served its community well and was beginning to offer improvement and the hope of progress. "It also serves the country well in demonstrating ... that it is possible successfully to challenge the assumption that poverty and ethnic diversity must necessarily lead to failure."
OFSTED has so far inspected 21 local authorities. At least another eight will be investigated this spring. The Newham and Bury inspections were carried out with the Audit Commission.
Next week the Local Government Association is to give evidence to the inquiry into OFSTED by MPs next week.