The report, published by the English as an Additional Language Association of Wales, is the first to examine the achievements of ethnic-minority pupils in Welsh schools. It shows that ethnic-minority pupils fall behind their peers, mainly as a result of their lack of proficiency in English.
But staff at Welsh-medium schools are able to use their language skills, honed on English-speaking pupils, in order to meet the needs of immigrant pupils.
Jonathan Brentnall, who co-ordinated the study, said: "There is a level of confidence in language learning at Welsh-medium schools, because teachers are bilingual themselves. Ethnic-minority pupils take more time to become fluent, but in the long term end up not only proficient in two new languages, but also high achievers."
Teachers at Welsh-medium schools are more willing to let ethnic-minority children use their first language in class than staff in English-medium schools, according to the report.
Jane Davidson, Welsh Assembly minister for education and lifelong learning, said: "The clear message coming from this research is the need for the Assembly to monitor the impact of our policies on minority ethnic pupils, putting the emphasis squarely on achievement."
There are more than 15,000 ethnic-minority pupils in Wales, compared with more than 900,000 in England. These pupils are distributed between 40 per cent of Welsh schools, with the majority attending schools in urban south Wales.