Inspectors found the council to be inadequate in 12 out of 15 categories, including the overall effectiveness of its safeguarding services, capacity to improve and quality of service.
Case planning, responding to complaints and ensuring children are safe were all judged to be inadequate.
The leadership and management of children’s services were also slammed for not providing value for money, failing to properly evaluate performance and for not being ambitious enough.
The report follows an inspection last month called for after an announced inspection in July highlighted concerns about the quality of practice, standard of middle management and case recording.
Last week the council’s director of children services Dean Ashton resigned, saying that the council needed a new approach to improving services.
Richard Hubbard, former director of children's services at West Berkshire and Worcestershire, has since been appointed as the interim director for children, schools and families.
Children’s minister Dawn Primarolo says she is now monitoring the situation in Cornwall and wants the council to put in place an action plan for improvement very quickly indeed.
She said: "It is deeply concerning that Ofsted’s report highlights fundamental weaknesses in Cornwall’s children’s services", adding, "I will take whatever action is necessary to ensure the safety of children and young people in Cornwall."
A joint statement by the council, NHS Cornwall and Isles of Scilly, Devon and Cornwall Police and the Cornwall and Isles of Scilly Safeguarding Children Board, says: "We would like to apologise to the children, young people and families in Cornwall who are failing to receive the quality of services they deserve."
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