The inspectorate rated the Cambian Childcare Ltd-run home in Oldham, which provides placements for young people with emotional and behavior difficulties, as "inadequate" after finding multiple failures deemed to be compromising children's safety and health.
During an inspection in August it was found that young people had gone missing for a number of days, during which time some had become involved in crime.
Young people were also found to smoke and misuse drugs without being challenged by staff, who are criticised by Ofsted for failing to support young people's health needs.
The report found that care plans and risk assessments are ineffective and fail to take into account children's needs. There is a lack of assessment of the compatibility of young people before they came to live at the home.
Meanwhile, healthcare plans contain incorrect information about young people's medication and the recording of young people's care experience was poor.
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