The watchdog has found that the education system too often fails to take into account the special circumstances of the children, such as frequent movement around the country and overseas and the stress of a parent being deployed.
Its report, Children in Service families: the quality and impact of partnership provision for children in service families, said siblings were sometimes taught in separate schools because of a lack of available places.
Children were also found to frequently miss parts of the curriculum and the inspectorate heavily criticised the transfer of records between schools.
In order to improve the situation, Ofsted said the government should recognise children of service personnel as a distinct group with specific needs.
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