The inspectorate delivered the warning following a focused visit in April to evaluate Stoke-on-Trent City Council's child protection arrangements for vulnerable adolescents.
Inspectors praised work by the council to improve support for children at risk of sexual, criminal and gang exploitation as well as those who go missing from care, home or school.
But they found that managers and staff are experiencing workload pressures as a result of high caseloads, with most social workers, including newly qualified staff, supporting 30 children each.
Ofsted said current caseloads are "inappropriate and unsustainable" because the children involved have complex needs.
Inspectors also said they found problems with managers' decisions not being recorded properly.
"Workload pressures for managers and staff in children's social care present the greatest challenge," states a letter from Ofsted to the council.
"While staff are extremely positive about working for Stoke-on-Trent children's services, social work caseloads are too high, with the majority of staff working at capacity.
"Although no young people were found to be at immediate risk, inspectors question the appropriateness of social workers being expected to provide 30 vulnerable children, who have extremely complex needs, with a consistently effective service. This is not sustainable."
The letter added that insufficient recording of managers' decisions meant it was unclear whether work is being tracked and reviewed.
In praising efforts to tackle the exploitation and children missing from home and care incidents inspectors welcomed the council's "mature, strategic" partnerships with other safeguarding organisations such as the police and drug workers.
"Working relationships with stakeholders to help and protect these vulnerable children are very positive and productive. Together, relevant partners identify and respond well to local challenges and demands," the letter states.
It adds: "In stronger cases, purposeful, relationship-based work, delivered by skilled, trusted practitioners is making a difference.
"For example, workers in the young people's drug project assist young people to understand risks and help them to make informed decisions. Direct work carried out by the authoritative, effective, child sexual exploitation social worker ensures that victims and witnesses receive timely and effective support, enabling them to stay safer."
Janine Bridges, the council's lead member for education and economy, said: "Inspectors carried out a thorough review of our services. We are really pleased that they had the opportunity to see the high level of commitment and hard work of our staff, the knowledge and expertise that our services provide and the excellent social work practice we have in place to support vulnerable children in the city.
"We are absolutely committed to providing the highest quality support, tailored to the needs of children in Stoke-on-Trent. We have well established and strong working relationships with partner agencies, and our work is making a real and lasting difference to people's lives."
Children's services in Stoke were rated "requires improvement" following their most recent full inspection in 2015.