A joint inspection by Ofsted and health watchdog the Care Quality Commission described the quality of education, health and care (EHC) plans as "unacceptable" and the standard of input by professionals to them as "shoddy".
A letter outlining the findings of the inspection said that the EHC process in Oldham is "fundamentally flawed", and "does not comply with the code of practice", adding that "there is possible illegal practice".
Inspectors found that the local area is "too quick to refuse to undertake assessments", with officers making decisions about whether an EHC needs assessment should be undertaken before they have gathered evidence required under the code of practice.
The quality of EHC plans that were produced was found to be "unacceptable".
"Outcomes for pupils are often meaningless and the level of input made by professionals can be shoddy and inaccurate," the letter states.
"Not all professionals routinely contribute to the plans."
During their visit in October, the joint inspection team also found a lack of accountability across all support services and poor-quality partnerships between education, health and social work.
The inspectors also question the ability of the council and clinical commissioning group to improve the situation.
Senior managers "are unaware of the extent of the weaknesses" states their letter, which adds that evaluation is inaccurate and not routinely used to ensure services improve.
"Leaders do not demonstrate the capacity to implement future plans," their letter adds.
"For example, they were unable to provide secure and reliable evidence of the difference their actions have made to children and young people and their families to date."
Inspectors are also concerned about the poor educational achievement of Oldham's SEND children, which they say is among the worst in England, with fixed-term exclusions and truancy commonplace among this group, particularly at secondary school.
"The lack of accountability at all levels is endemic," states the inspectorates' letter.
"The absence of joint working means that leaders of education, health and social care are not holding each other to account for the effectiveness of their work."
Despite their concerns inspectors praised work to ensure older children with SEND are involved in education, employment or training. Meanwhile, all those receiving SEND support are in education, work or enrolled on a training course at the age of 17, inspectors found. Those with complex needs are also supported well by career advisers.
"Young people are re-engaging in college education and into the workplace, with significant improvement in their ability to participate in their local community," state inspectors.
Oldham's lead member for education and early years Amanda Chadderton said the council fully accepts the criticisms and has pledged to take action.
"The failings it identifies are unacceptable and we are sorry for anybody who has been let down by delays and weaknesses in how health, education and social care services have been working together in this area," she said.
"I want to assure parents that we are working hard alongside NHS Oldham CCG to address these issues. Since the inspection, we have put measures in place - including further resource for additional officers - to drive this important work forward as a top priority.
"We need to get services working closer and smarter together than ever before - and we also truly need to put families' views and experiences at the heart of everything that we do for and with them.
"Improving the life chances and outcomes for children and young people with SEND living in Oldham is absolutely vital. We recognise that there is much work to be done, but we are determined to continue taking action and address these challenges as quickly as possible."
