Chief Inspector of Schools Christine Gilbert condemned the high failure rate and said it was "unacceptable" that the gap between the best and worst state schools was so wide.
She demanded urgent action to raise standards, warning: ""The report card for English education has been increasingly encouraging over the past 10 years, but it is still not good enough."
In her first annual report since becoming Chief Inspector, Ms Gilbert said a good education can "liberate and empower" children.
"The story is not always positive, however," she added.
"That is why I am so concerned at the gap between the best provision and that which makes an inadequate contribution to improving the life chances of children and young people.
"Too many schools are inadequate - about one in 12 of those inspected, and in secondary schools this proportion rises to just over one in eight."
Ms Gilbert said many secondary schools, which are often far larger than primaries, faced a "substantial" range of issues which held them back.
"However, more needs to be done, and swiftly, to reduce the number of secondary schools found to be inadequate," she said.
Ofsted's annual report was based on evidence from inspections of 6,000 state schools during the 2005-06 academic year.
The watchdog found:
:: 11% of all state schools were outstanding, about half were good, 34% satisfactory and 8% inadequate;
:: 13% of secondary schools were inadequate, and 7% of primaries;
:: School attendance was not good enough in one in 10 schools, with particular problems in London and the North of England.
:: In nearly one in three secondary schools, behaviour is "no better than satisfactory overall, and in these schools there are also instances of disruptive or distracting behaviour from some pupils".
The findings follow the first year of a new inspection system, in which Ofsted conducted "shorter and sharper" inspections, giving schools only a few days' notice before visiting.
The new criteria for schools were also tougher than before, which explained in part why so many schools were judged to be poor.
Ms Gilbert said: "The new inspection arrangements have raised the bar, but without putting it out of reach.
"The performance of schools, and the public's expectations of them, have both risen, and it is right that inspection should reflect that."
Schools Minister Jim Knight said it would not be fair to make comparisons with previous years.
"Direct comparisons between school judgments in this year's report and previous ones would be misleading," he said.
"This report reflects the first year of the toughest inspection regime we have yet introduced.
"Schools that may have been judged as good in previous years might only be judged as satisfactory now.
"However, we make no apology for raising the bar - expectations are higher than ever and judgments need to be tougher than ever.
"No school should be inadequate and there should be no hiding places for under-performance or coasting.
"That is why the Education and Inspections Act is introducing tough new powers to turn around schools, closing or replacing them if they do not make adequate progress within 12 months."
Shadow education secretary David Willetts said: "It is still not good enough that four out of 10 schools are regarded by Ofsted as merely satisfactory or downright inadequate.
"There is one success story - special schools.
"But the Government is putting more effort into closing good special schools than closing inadequate secondary schools.
"We need a moratorium on special school closures.
"The wide gap between the best and worst-performing schools is also very worrying.
"The best way to bridge this gap is by concentrating on discipline, improving behaviour and more streaming and setting in all schools."
Ms Gilbert told reporters that secondary school failure was the biggest problem facing the education system.
"It's unacceptable that one in 12 of our schools inspected was judged to be inadequate in the last year.
"In the secondary school sector this rises to around one in eight, nearly twice that in the primary sector," she said.
"The range of issues a secondary school can face can be large, even daunting, particularly when issues rooted outside the school gates are taken into account.
"But the proportion of secondary schools judged to be inadequate remains the greatest challenge to the education system.
"More needs to be done - and swiftly - to reduce the number of secondary schools found to be inadequate."
She added: "If we want a world-class education service it is right that our inspection judgments should be tougher than ever."
Ms Gilbert said the fact that nearly one in four secondary schools - and a third of all schools - were merely "satisfactory" was also a cause for concern.
"I would share the view of my predecessors that 'satisfactory' is not good enough," she said.
The quality of the headteacher and deputy heads is the key to whether a school succeeds or fails.
Ms Gilbert said she could not remember reading a report on a school which had been put in special measures - Ofsted's lowest category - which said the leadership was good.
But headteachers condemned the report from the Government watchdog.
John Dunford, general secretary of the Association of School and College Leaders, said: "Ofsted and the Government are setting schools up for failure.
"What school leaders need is not more pressure and constantly moving goalposts.
"Instead the Government and public should trust them as professionals to do the job they were employed to do.
"Ofsted should be part of that supportive improvement process. Currently it is part of the problem.
"Reports such as these will cause a crisis of confidence among the leaders of the profession unless we start to accentuate the positive aspects of schools' performance."
Steve Sinnott, general secretary of the National Union of Teachers, said: "Heads often feel that inspection has become a type of Russian roulette following previous arbitrary changes by Ofsted to the rules.
"Christine Gilbert is right to highlight the importance of leadership to high standards but the effect of arbitrary rule changes has been to discourage and undermine the morale of some headteachers."
Chris Keates, general secretary of the NASUWT union, also attacked Ms Gilbert's judgments.
"Unfortunately, this is the same old tired annual report we have come to expect from Ofsted," she said.
"The percentages of schools in different categories change each year but the basic story does not.
"Year-on-year comparisons are meaningless as each year the goal posts change."
Councillor Les Lawrence, chair of the Local Government Association's children and young people board, said: "This report should not turn into a name, shame and blame game but act as a way of identifying those authorities that need extra support."
Liberal Democrat education spokeswoman Sarah Teather said: "Labour is letting down all those pupils who rely on these failing schools to give them a fair start in life.
"Failing schools often suffer a recurring set of problems, and criticism from Ofsted has to be matched by practical measures to support them.
"Under-performing schools are more likely to have non-expert teachers in key subjects like maths and science and have a harder time recruiting headteachers.
"Time and money needs to be invested in turning these situations around, with more training for existing teachers and greater incentives to become a headteacher."
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