Sixth formers learning to speak English are falling behind because teachers are not properly trained to help them, according to Estyn.
The inspectorate has released a report revealing that most A-level students from ethnic minorities learning English as an additional language (EAL) are taught by staff without relevant qualifications.
Estyn praised English language support in schools, but said provision for 16 to 19-year-olds was "unstructured" and lacked a national strategy.
Schools were deemed to give better support than colleges, but both lacked plans to support older students whose mother tongue was not English or Welsh. These students learnt at a slower pace than their peers, partly because they spent a lot of time translating.
According to the report, many teachers felt their students were receiving the wrong sort of support. Some could not pursue their preferred course because of poor language skills, not a lack of ability.
Estyn made 14 suggestions to improve provision, including training more "frontline" staff to teach the English language and developing peer learning and mentoring.
It called on the Assembly government to set a national strategy and analyse student data.
There are no all-Wales figures for EAL students and many schools and colleges do not know how many they have enrolled.
Schools already collect detailed information about their pupils' backgrounds through their annual census, but little is known about EAL students' destinations after leaving compulsory education.
Estyn also urged young people's partnerships to improve transition from schools to sixth forms and colleges and to share more information about students.
Cardiff was cited as an example of good practice for aiming to improve transition from Years 10 to 12, but Estyn said this was still in the early stages.
The authority's ethnic minority achievement service, which runs homework clubs for Somali children, was also singled out for praise.
A government spokesperson said the report presented a great challenge. "We will consider carefully what can realistically be achieved alongside other priorities," he said.