Heads are calling for an end to Ofsted's practice of labelling schools "good" and "outstanding".
Instead, the Association of School and College Leaders (ASCL) wants the watchdog to adopt a more modest, "above expected level of performance" description for top-rated schools.
The union is calling for a complete overhaul of the school accountability system that would include cutting the number of Ofsted gradings from four to three.
"Satisfactory" and "inadequate" would also go, to be replaced by "around expected level of performance" and "below expected level of performance" grades.
The union says schools are unhappy with the "satisfactory" grading because it offers no valid statistical distinction from "good" and "implies that the standard of education is less than satisfactory".
It also wants Ofsted to stop its practice of "raising the bar" by introducing ever tougher school inspection frameworks.
John Dunford, ASCL general secretary, said: "The way in which Ofsted continues to raise the bar for inspections makes it appear that the quality of schools and colleges across the country is declining, when in fact they are continuing to improve.
"There must be consistency between successive inspections."
The recommendations come at a time when big changes for Ofsted are already being considered.
In opposition, the Conservatives said that if elected, they would aim to ensure Ofsted's school inspection framework was "radically simplified", with a renewed focus on education. They backed dropping wider children's welfare categories such as ensuring that schools promote healthy lifestyles.
Ministers have also confirmed they will exempt schools rated "outstanding" by Ofsted from regular inspections, freeing up the watchdog to concentrate resources on schools it judges to have problems.
The Ofsted reforms are expected to be introduced as part a second education bill this autumn.
By that time, the Commons education select committee will have begun its inquiry into Ofsted. The committee will examine its performance, inspection process and whether its huge expanded children's services remit is working.
The watchdog took on inspections of children's social services, youth courts and adult learning in 2007. But since then its budget has been cut by a third.
Christine Gilbert, Ofsted chief inspector, will leave next year.
The ASCL wants the Government to set up a group of statistical researchers and school leaders to find ways to improve the contextual value added (CVA) measure.
It regards CVA, which factors in pupil background and prior attainment into schools' academic performance, as a more legitimate measure than value added or raw exam results, but admits that the measure has "shortcomings".
Dr Dunford said: "Schools and colleges are rightly accountable for how they spend public money and for the quality of education young people receive.
"However, the current accountability mechanisms are poor and often create the wrong incentives, which inevitably impact on how and where resources are focused.
"The emphasis on raw results in league tables and Ofsted inspections creates a perverse incentive for schools and colleges to attract the brightest students.
"The performance indicator of the proportion of students with five GCSE passes at grade C or above encourages schools and colleges to concentrate disproportionately on students at the CD borderline."
An Ofsted spokesperson said: "Feedback from schools indicates that they very much value reports which identify them as "good" or 'outstanding' and that this is useful to parents.
"People tell us they value our work in driving improvement and it is right that we should raise expectations whenever the school inspection framework is revised.
"A time of significant policy change provides a good opportunity to examine our activities and find ways to increase the impact of inspection, help schools improve outcomes and increase our value for money."