The council received the lowest rating of inadequate in 13 out of 15 areas of its work in safeguarding children.
The overall effectiveness of the service, capacity to improve, quality and service and management were all given this low ranking.
The inspectors' report said: "The analysis of safeguarding need within the diverse children's population in Sandwell is inadequate and lacks comprehensive
awareness of potential risk to some vulnerable groups within the community."
The council's inability to improve was a major cause for concern. Improvements brought in three years ago "were not sustained" and the relationship between the children's trust and local safeguarding board was confused.
Sandwell Council leader Darren Cooper pledged to bring in "far reaching and rapid improvements" to its safeguarding services.
He said: "We apologise for the serious failings on safeguarding identified in the report and are taking action to put them right."
He added that urgent assessments have been carried out regarding cases that concerned inspectors. A review of the performance of managers and staff is also taking place.
The council's executive director of children and young people's services Roger Crouch resigned last month, "for personal reasons and in the interests of the service," according to Cooper. The council is now on the hunt for a permanent replacement.
The council's services for looked after children were also assessed by inspectors and fared better. These services received adequate ratings in all but one category, user engagement, which was judged to be inadequate.
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