Brighton & Hove City Council ceased using agency social workers in September 2017 with the help of additional investment that allowed it to over-recruit to its workforce.
In its latest full inspection report, Ofsted said the policy helped the council create a more stable and skilled workforce and has also improved children's relationships with social workers.
It had previously been rated 'requires improvement' in June 2015.
However, inspectors did note that the council's policy not to use agency staff meant there was reduced social worker capacity in some parts of the service including private fostering, where the majority of children did not have an allocated social worker.
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