Sir Michael Wilshaw said arrangements for closing down unregistered schools are "inadequate" and local authorities are not acting swiftly enough to identify them and ensure that all children and young people are kept safe.
In a letter to Morgan published today, Wilshaw said that despite Ofsted previously raising concerns about the issue, no individual has ever been prosecuted for operating an unregistered school.
"Difficult as it may be to build a legal case that may have a reasonable prospect of success in court, I remain concerned that not enough is being done to stop this illegal activity," the letter states.
"Too many children remain at significant risk of harm. I will continue to do all that I can to identify and inspect unregistered schools."
Wilshaw has called on Morgan to "urgently review" the arrangements between the Department for Education and local authorities for safeguarding children in premises confirmed by Ofsted as unregistered schools.
He also wants Morgan to review the arrangements for home education to ensure that they cannot be exploited in order to avoid registration.
The letter reveals that, since September 2014, government officials have requested that Ofsted check 28 institutions where there were suspicions that an unregistered school may be operating.
In 15 cases Ofsted found evidence that an unregistered school was operating, with more than 800 children found in the premises during visits.
“From conversations with some of the children and young people my inspectors spoke to, there is evidence to suggest some of these schools are using the freedoms afforded to genuine home educators as a cover for their activities,” the letter states.
Wilshaw highlights to one “deeply troubling case” where Ofsted visited Bordesley Independent School in Birmingham for the fifth time.
"Inspectors were intentionally obstructed from entering the premises for an hour," the letter states.
"During this time, inspectors observed a number of female students to be on the premises. When inspectors finally gained entry, the girls had left the building by an alternative exit.
"The staff on site informed inspectors that these girls were attending a local library and that they would return later in the day. They did not return and the staff were unable to account for their whereabouts for the duration of the inspection visit.”
Inspectors reported finding squalid conditions, evidence of segregation, with separate classrooms for girls and boys, and no evidence of appropriate vetting checks being carried out on staff.
“While our findings in respect of unregistered schools, and particularly Bordesley, are deeply worrying, my regional directors continue to express concern that there are far greater numbers of children hidden away from view in unregistered schools across the country.
“Local authority officers acknowledge the problem, but too often use the excuse of bureaucracy, legislation or lack of resources as a reason for inaction.
“I remain particularly concerned about the lack of action taken in response to these issues by Birmingham City Council.”
Wilshaw added that it is vital, that when unregistered schools are discovered, the full force of the law should “be brought to bear on these institutions to stop them operating".
Wilshaw's intervention comes despite the government's Counter-Extremism Strategy, launched by Prime Minister David Cameron last month, containing plans for the Department for Education (DfE) to develop a new system to intervene in unofficial Islamic schools, also known as madrassas, where there are concerns about the way children are being taught.
Education Secretary Nicky Morgan said: “Since 2010 we have taken robust steps to tackle unregistered schools and improve safeguarding.
“However we agree with Sir Michael that more needs to be done. That’s why the Prime Minister announced at the Conservative Party Conference that we will introduce further powers to regulate settings which teach children intensively and to intervene and impose sanctions where there are safety or welfare concerns.
"We will be consulting on these proposals shortly.”
Local authority children's services directors have previously called for government to take action on madrassas.
Speaking last month, Gail Hopper, director of children’s services in Rochdale said it is difficult to monitor where madrassas have been set up.