Teacher assessments of 11-year-olds are often inaccurate and unreliable, according to a report by Estyn, the Welsh inspectorate.
Inspectors found huge inconsistencies between individual primary schools in the levels they awarded to pupils at the end of key stage 2.
Since Sats were abolished in 2005, teacher assessments have determined pupils' standards at the age of 11 and 14. But Estyn says the lack of a national system to verify the accuracy of KS2 assessments is causing concerns about their reliability, and more robust systems at KS3 are resulting in greater accuracy.
The concerns have been accepted by the Assembly government, which announced a pilot scheme to externally moderate marks given to Year 6 pupils.
Ann Keane, interim chief inspector at Estyn, said: "School inspections consistently show that about a quarter of the schools inspected each year have shortcomings in some aspects of assessment.
"This is a significant challenge, mainly in the primary sector where less robust systems are in place than in secondary schools for assuring the accuracy of teacher assessments."
The report says that in the most effective primaries, teachers hold regular moderation meetings to improve their classroom assessment. But in four out of ten schools such meetings only happen once a year.
Staff are also not making the best use of the time to work on assessment activities, it claims. Two extra days were available for curriculum and assessment purposes last year but half of the schools Estyn surveyed failed to use them.
Inspectors are also concerned that the "rarely cover" aspect of the teacher workload agreement, which came into play last September, may mean that teachers find it more difficult to attend assessment training.
Gareth Jones, secretary of the Association of School and College Leaders Cymru, said the report confirmed the concerns of its members in recent years: "We're not arguing that there needs to be a return to Sats, but there needs to be a reliable and robust assessment at KS2 because that's how progress of students through KS3 and KS4 is judged.
"We need an accurate picture of where pupils are when they arrive. There have been examples of students arriving at secondary schools being awarded high levels at KS2 who turn out to have poor literacy skills and require extra support."
An Assembly government spokeswoman said the pilot scheme would extend external moderation to core subjects at KS2 in primary schools in line with Estyn's recommendations.
"There is evidence of real benefits to secondary schools from our national arrangements requiring all to have robust systems for teacher assessment, supported by a programme of external moderation checks.
"Overall, primary and secondary teachers are becoming more confident about their understanding of national standards."