The inspectorate's 2017 annual report states that in some cases informal exclusions are taking place, with parents being asked by head teachers to keep children at home as schools are unable to effectively support them.
Formal exclusions of SEND children with challenging behaviour is high in a third of areas, said Ofsted.
Also, children whose special needs are not severe enough to require an education, health and care (EHC) plan are found to have a worse time in school than those with an EHC plan.
Ofsted is also concerned that too often school leaders are failing to measure how support is helping to improve children's lives.
"Some parents reported that they had been asked to keep their children at home because leaders said that they could not meet their children's needs. This is unacceptable," states the report.
"Many children who have SEND present very challenging behaviour. These children and young people can be particularly vulnerable to underachievement. The underlying causes of poor behaviour in children are not always evident, and therefore there is always a risk of misidentification.
"The number of pupils who have SEND and were excluded was typically high. For example, the exclusion of SEND pupils was identified as being high in a third of local areas inspected."
The charity Ambitious about Autism shares Ofsted's concerns.
"Too many children with special educational needs are being denied the opportunity to thrive at school," said Ambitious about Autism external affairs director Alison Worsley.
"Our research found that 26,000 children and young people with autism were unlawfully excluded from school last year. We heard from parents whose children are routinely sent home early, taught in corridors or cupboards for weeks on end with no contact with their peers and banned from going on school trips.
"This treatment can have an enormous impact on young people's mental health, as well as their ability to learn."
Richard Watts, chair of the Local Government Association's children and young people board, said that central government underfunding was a cause of schools failing to meet the needs of SEND children.
"The LGA was clear with government from the outset that SEND reforms set out in the Children and Families Act (2014) were significantly underfunded," he said.
"There is increasing concern among councils that at a time of rising demand, they will be unable to meet the needs and expectations of children and families in their areas."
He added: "Home schooling is an option for parents but it should never be because they are unable to find a school willing to accept their child."
Last month children's commissioner for England Anne Longfield told members of the House of Commons education select committee that she is concerned about schools forcing children with behaviour issues to leave school, with many often becoming home schooled.
Ofsted's report also reveals that there is a group of 130 schools that have failed to record a "good" inspection rating since 2005 despite "considerable attention and investment from external agencies".
Nine out of 10 primary schools and 79 per cent of secondary schools are judged to be "good" or "outstanding", the report adds.
In addition, the quality of early years provision is improving, with 94 per cent judged "good" or "outstanding", compared with only 74 per cent in 2012.
National Day Nurseries Association chief executive Purnima Tanuku said: "With all the financial pressures currently facing nurseries, particularly in offering government-funded hours with limited funding, this is a remarkable achievement."
This is the first annual report presented by Amanda Spielman, who was appointed as chief inspector in January.
The report also includes an overview of standards in children's social care services in 2017.