The leadership at Bournemouth Council has been rated as "inadequate" following the inspectorate's visit in July.
Inspectors found that the council had made little progress in areas requiring improvement at their last inspection in April 2014, including better support for children on the edge of care and care leavers.
They also found problems that leaders were not aware of such as poor quality support for 16- to 17-year-olds who are homeless.
But the inspection team concedes that the council's leadership has been hindered by local government reorganisation in Dorset that will see Bournemouth, Christchurch and Poole councils merged into a single authority in April 2019.
Cuts in senior staff numbers have also impacted on Bournemouth's ability to oversee social work and deliver improvements, say inspectors.
"The local authority has not progressed a number of key areas identified as requiring improvement at the last inspection, for example services to children on the edge of care and care leavers," states Ofsted's report.
"This has impacted negatively on the experiences and outcomes of this group of young people. The local authority identified through their self-assessment the majority of areas that require improvement.
"However, plans in place to address these are not sufficiently rigorous and have not been reviewed."
It adds: "A planned local government reorganisation of Bournemouth, Christchurch and Poole into a single local authority, and the delivery of a number of frontline services, such as the out-of-hours children's service and multi-agency safeguarding hub, in partnership with other authorities, has inhibited the ability of the local authority to deliver timely service improvements."
Inspectors have graded Bournemouth as "requires improvement" in terms of overall effectiveness, child protection and support for looked-after children and care leavers.
Despite concerns around leadership inspectors found that when children were identified as being in need of help and protection they were well supported.
"Effective work is undertaken with them to reduce risk and address their needs. When children's circumstances do not improve, timely action is taken by social workers to safeguard their welfare," adds Ofsted's report.
Jane Portman, Bournemouth Council's managing director said: "We welcome the findings in the report, which has identified strengths and areas to improve further. These are our focus and our priority and progress is already under way to address the issues raised. The council has already established an improvement board to oversee implementation of the robust action plan and ensure necessary improvements are made quickly."
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Meanwhile, inspectors have found that Torbay Council's children's services continue to be "inadequate" overall.
All judgments from their last full inspection in 2015 remain unchanged.
Torbay's child protection services continue to be "inadequate", while looked-after children and care leaver support remain graded as "requires improvement" and adoption services are still rated as "good".
Inspectors said that "some improvements have been made, but not enough".
The quality of practice ranges across and within services, from areas showing serious weaknesses, such as fostering, to pockets of strong, focused work, such as early help," states Ofsted's report.
In October 2017 the Department for Education ordered Torbay Council to allow Plymouth City Council to take charge of its children's services department in a bid to improve standards.
"We are disappointed with the judgment of this Ofsted inspection, but we acknowledge the issues identified that have impacted on the pace and consistency of improvements and outcomes for children," said Plymouth and Torbay's director of children's services Alison Botham.
"We are already implementing recommendations requiring immediate action, in order to address the significant weaknesses identified in key areas."