A monitoring visit by the watchdog concluded that the council is responding "positively" to recommendations following the October 2014 inspection judgment in the wake of the town's child sexual exploitation scandal.
Inspectors praised the senior management team for its "determined, effective, and strategic leadership", stating that they had undertaken an "honest and robust" self-assessment of the service they provide to looked-after children and had also sought external peer scrutiny.
"The result is that they know themselves well," a letter outlining the findings of the monitoring visit states.
"The [director of children's services] has a clear vision and understanding of the key priorities to improve the experience and progress of looked-after children."
They also pointed out that social work caseloads for the looked-after children's service had been reduced to an average of below 15, in order to allow social workers to focus on the quality of their work with children.
However, despite these changes, Ofsted said that the quality of some social work practice "remains poor".
"When children become looked-after, there is a lack of urgency to identify their long-term needs and secure early permanence," the letter states.
"Senior managers have begun to track those children subject to voluntary arrangements and, while this is beginning to drive some children's plans forward, too many continue to experience delay in securing legal permanence."
Inspectors did say that the management capacity of frontline team capacity had been improved thanks to some permanent appointments across the looked-after children team.
A coaching and mentoring programme for team managers is in place, with the help of a local authority practice partner, and is due to be extended to support social workers from this month.
"There is some evidence that managers are beginning to deliver more regular supervision," the letter states.
But overall, management oversight of frontline social work practice was found to be "weak". The inspection letter states that social workers are "neither supported or challenged sufficiently by managers to improve the quality of their work".
Meanwhile, despite the workforce strategy leading to a reduction in reliance on agency social workers and managers to 18 per cent, children are not yet getting the opportunity to develop a "trusting relationship" with their social worker.
"In recent months, children have experienced a number of changes in social workers and their managers, which has had a negative impact on the timely progression of children's assessments and plans," the letter states.
Ofsted also found that new staff had been taken on as part of a focus on speeding up care proceedings, but said the process could be more effective than it currently is.
"There are delays in assessments being undertaken before care proceedings are issued and some delays in proceedings being issued once interim care applications have been sent to legal services," the letter states.
"Family members are not identified or assessed early enough when children become looked-after, which does not support children in developing a sense of security within their family.
"When children return home to parents, assessments and support to ensure that children experience good-quality family contact is insufficient and some venues used currently for contact are inappropriate."
Concerns were also flagged up that when child protection concerns arise, procedures are "not always followed".
"Screening tools to explore child sexual exploitation concerns are not being completed correctly in all cases when a child may be at risk, despite previous improvement visits identifying more robust practice in this area," the letter states.
However the council was praised for its direct engagement with children from the children in care council, who told inspectors they feel "valued and involved" in developing their own plans and contributing to service developments.
Inspectors also praised improved relationships with health partners, which have resulted in looked-after children being prioritised for assessment by child and adolescent mental health services.
Senior managers had also taken "appropriate steps" to decommission the majority of in-house residential care placements, and they were not up to the required standard.
Ian Thomas, director of children's services at Rotherham Council, said: "This monitoring visit has not shown up anything we were not already aware of and as inspectors point out, there are plans in place to deal with all the issues highlighted.
"This includes the implementation of a new social care IT system to aid recording and agreement to introduce a new social care operating model alongside high quality training and development to improve practice.
"We have had to invest in every area of looked-after children's services as they have been severely underfunded for years, leading to the issues we are now dealing with.
"However, I am pleased the inspectors have recognised the hard work we have done, and will continue to do, to improve progress here in Rotherham."
Rotherham was inspected in October 2014 following concerns about historic instances of CSE flagged up in a report by Professor Alexis Jay in August 2014.
Evolve, a specialist multi-agency service in Rotherham to combat child sexual exploitation, was launched in July.