Sandwell, the third most deprived area of the country outside London, has serious flaws in its education service, say government inspectors.
But they praise the Black Country borough, whose schools' results are among the worst in the country, for turning the corner on the way to higher standards.
Overall, the message was one of optimism: the local authority and its schools were no longer merely making excuses for low attainment, said the inspectors' report.
Pupils from Sandwell, centred on West Bromwich in the West Midlands, needed the best support available if they were to escape a vicious circle of underachievement. Many children had been let down by the authority's previous lack of action, they added.
The authority's performance, like that of its schools, left much to be desired, said the 64-page report by the Office for Standards in Education. "That is a hard judgment, but not one that the LEA would dispute."
The report, only the second into a local authority under the new Education Act's extension of OFSTED powers, was well received by Sandwell officials. In contrast, officials in Manchester, the first authority to be inspected, condemned their report as "unfair and unbalanced".
In Sandwell, historically a manufacturing area where school-leavers found it easy to find work, parents and pupils had low educational expectations, and few students stayed on at school for the sixth form.
Faced with deprivation and such modest aspirations, council policies had allowed pastoral care to be rated more highly than academic achievement at school, the inspectors said. "If the schools have been caring places they have been, with exceptions, neither challenging nor successful in relation to the standards achieved.
"Attendance is unsatisfactory and performance in tests and examinations among the worst in the country."
The report said disadvantage was widespread and worsening in Sandwell, but that new council initiatives had already produced some improvement.
Bill Thomas, chair of Sandwell's education committee, said Pounds 200, 000 was to be spent on implementing the inspectors' recommendations this year. "I am confident that standards will steadily rise and we will make our way up the national league tables."
So far, half of the authority's secondary schools have shown no rise in standards, although attendance has improved. However, primary school results had increased by more than the national average.