Teachers are doing a great job but desperately need more support from parents to crack down on absence and bad behaviour, according to Mike Tomlinson, the chief inspector of schools.
In his second and final annual report, Mr Tomlinson said the amount of teaching that is good or better had never been higher.
"It is particularly encouraging to see that there has been a notable increase in the proportion of schools where our inspectors saw no unsatisfactory teaching," he said.
But he also noted that behaviour had not improved in the past year. Attendance had declined and some parents were hindering the fight against truancy.
"Many schools are finding it ever more difficult to impose a code of discipline supported by all parents," he said. Behaviour was unsatisfactory in one in 12 schools. Many parents condoned absence: attendance levels fell to 90.9 per cent overall.
"More than 80 per cent of young people stopped in shopping centres during school time by the police or welfare service are accompanied by an adult," he said. "Schools, and in particular teachers, need and deserve better support from some parents."
But one union said the Office for Standards in Education was partly responsible for the rise. Chris Keates, deputy general secretary of the National Association of Schoolmasters Union of Women Teachers, said: "The OFSTED system actually underpins a problem with absences. A school with a lot of unauthorised absences can be seen as having serious weaknesses or to need special measures.
"The school will authorise absences that it doesn't really want to, because the alternative is for OFSTED to say you are failing."
Damian Green, the Conservatives' education spokesman, said schools should have more disciplinary powers, adding that parents had been encouraged to feel that the head was not the ultimate power. "Sadly, some parents feel they can take on the head," he said.
Mr Tomlinson praised school improvement and quality of leadership. He was optimistic about standards in primaries, saying that the trend at key stage 2 is clearly upwards, despite a blip in results.
But he raised concerns about secondaries, pointing out that there had been little change in English standards at key stage 3 for three years.
He highlighted significant underachievement in 7 per cent of schools, a wide gap between girls' and boys' attainment, the decline in specialist staff teaching subjects, and worsening attitudes to learning among pupils aged 12 and 13.
Mr Tomlinson said he was particularly concerned at the widening gap between the best and worst secondaries. And he said African-Caribbean, Pakistani and Bangladeshi pupils were being failed by the system.
He also raised the issue of recruitment and, particularly, retention of teachers and said that more and more classes were being taught by teachers without the necessary qualifications.
Teaching unions praised Mr Tomlinson's report. Peter Smith, general secretary of the Association of Teachers and Lecturers, said: "In a fairly brief period he has re-established the credibility of OFSTED, which is a great personal tribute."
John Bangs of the National Union of Teachers said: "Mike Tomlinson has produced a radically different and thoughtful report."
MAIN FINDINGS 20002001
* Disappointing key stage 2 test results but literacy and numeracy targets for 2002 are within reach and Tomlinson still optimistic
* Only 3 per cent of lessons now poor, the lowest-ever proportion
* Nearly half of all schools have no unsatisfactory or poor lessons
* 67 per cent of teaching good or better, up from 64 per cent
* Significant underachievement in seven schools in a hundred
* Wide gap in girls' and boys' attainment
* Fall in overall attendance levels to 90.9 per cent
* 68 per cent of teaching good or better, up from 65 per cent
* 15-year-olds achieving five-plus A*-C GCSE grades or GNVQ equivalent: 48.4 per cent (up from 47.4 per cent)