Special educational needs provision for pupils and young people across Birmingham has been described as "weak" by Ofsted inspectors.
The council and clinical commissioning teams have been asked to provide a written statement of action due to "significant areas of weakness".
But, Ofsted said, there are areas where teams are working well, particularly in early years help.
The Labour-run council said it is clear that services need to improve.
Among its main findings, the report said pupils who have special educational needs or disabilities make "weak" academic progress, attend school less often and are excluded more frequently than other pupils in Birmingham and nationally.
It also found:
- A lack of strategic and coordinated leadership
- Not enough young people who have SEN and/or disabilities entering employment or supported employment
- A great deal of parental dissatisfaction.
But, it said the authority was aware of its strengths and weaknesses.
The city council's children's services overall have held an inadequate rating since 2008.
Conservative opposition called the council's children's services a "continued failure".
The council has not "taken responsibility for the harm caused and possibilities lost," shadow cabinet member for children's wellbeing, Alex Yip, said.
Inspectors visited Birmingham between 25 and 29 June, speaking to children with special educational needs and their parents, as well as visiting providers and staff working in the service.
In a statement, Kate Booth, cabinet member for children's wellbeing at the council and Dr Richard Mendelsohn, chief medical officer at NHS Birmingham and Solihull Clinical Commissioning Group (CCG), said: "We are absolutely clear that services need to improve significantly, and rapidly, so that children and young people in Birmingham have their needs met and are properly supported; this is to ensure that they can achieve their full academic potential and can lead fulfilling lives."