The report, called Personal, Social, Health and Economic Education in Schools, found that in three-quarters of 165 maintained schools featured in the report PSHE was either good or outstanding.
But in one in four schools visited, the quality of teaching was patchy, with inspectors finding that teachers lacked knowledge about the subject and the skills to teach it.
Chief inspector Christine Gilbert said: "In addition, some schools still struggle to teach their pupils effectively about sensitive but important issues, such as the misuse of drugs and alcohol."
In half of secondary schools featured in the report, inspectors found that pupils’ knowledge about the risks of binge drinking was poor. The report also showed that a study programme introduced in 2008 to include "economic well-being" in PSHE lessons was still not well established in some schools.
The best schools were those that taught involved key themes to arise in PSHE across other subjects and treated subject matter "discretely".
They also linked in PSHE subjects into after-school activities, such as music and drama productions and school visits.
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