St Benedict's School chiefs offered a "heartfelt apology for past failures" as Lord Carlile of Berriew detailed 21 attacks over 40 years.
The peer said he hoped his decision to take powers away from Ealing Abbey would "set a template" for other schools.
Four top fee paying schools - including Ampleforth College, North Yorkshire, and Downside, near Bath - share similar structures to St Benedict's.
In his inquiry, Lord Carlile outlined a catalogue of failures by the west London abbey to intervene as allegations of abuses came to light.
"I have come to the firm conclusion... that the form of governance of St Benedict's School is wholly outdated and demonstrably unacceptable," Lord Carlile wrote.
"The abbot himself has accepted that it is 'opaque to outsiders'."
The crimes of Father David Pearce - jailed for a catalogue of abuse against five boys over a period of 36 years - illustrate how "St Benedict's rule of love and forgiveness appears to have overshadowed responsibility for children's welfare".
The report added: "In a school where there has been abuse, mostly - but not exclusively - as a result of the activities of the monastic community, any semblance of a conflict of interest, of lack of independent scrutiny, must be removed."
Two trusts should be launched to remove "all power from the abbey" while maintaining the Benedictine connection for the parents, Lord Carlile said.
Changes will be in place by the beginning of the next academic year, he said.
Headmaster Chris Cleugh admitted the west London school "could have, and should have, done more" to stop the abuses.
He said the school was "totally" committed to implementing the changes.
Responding to the report, he said: "Past abuses at the school have left a terrible legacy on those affected and have tarnished the reputation of St Benedict's.
"On behalf of the school, I offer my heartfelt apology for past failures."
According to campaigners, those affected by sex attacks may number in the hundreds.
Pearce - referred to as the "devil in a dog collar" - was jailed in October 2009.
Police are also hunting Father Laurence Soper over allegations of child abuse dating back to when he taught at St Benedict's from 1991 to 2000.
He is believed to have been living in a monastery in Rome but was due to return to London to answer bail in March.
Lord Carlile urged Father Soper to surrender himself to officers, saying: "I regret very much the difficulties he has caused."
St Benedict's abbot Martin Shipperlee commissioned the inquiry before the Vatican announced it had ordered a separate inquiry into historic sex offences.
It was published a day after the High Court ruled that the Catholic Church can be held liable for the wrongdoing of its priests.
The monastic community was at fault for its "lengthy and culpable failure to deal with what at times must have been evident behaviour placing children at risk," the report said.
Lord Carlile told how types of abuses at St Benedict's ranged "across the spectrum of such behaviour".
Most complaints were "represented at the time to be chastisement and physical punishment" but had sexual motives.
"The reality, borne out by some of my correspondents, is that the combination of fear, a sense of guilt, repetition, physical pain, revulsion and knowledge of impropriety may have an extremely damaging effect on future life chances whatever the detail of the abuse."
He added: "Primary fault lies with the abusers, in their abject failure of personal responsibility and self-control, in breach of their sacred vows if monks, and for all in breach of all professional standards and of the criminal law."
Lord Carlile said he had met schools inspectors, the monastic community and the Department for Education during his investigations.
Campaigner Jonathan West, 49, a computer consultant from Hanwell, west London, whose son is a past pupil at St Benedict's, criticised the report for not "going far enough."
"It is fine, as far as it goes, but it does not really go far enough. The proposals for governance are perfectly sensible but they do not really get to the heart of the problem which is safeguarding and child protection, not governance," he said.
He added: "Reporting paedophile abuse is terribly, terribly bad for business.
"Unless there is an absolutely clear and unequivocal policy for automatic reporting with no exceptions and a definite and absolute determination on the part of the school to make sure that they are following the policy, there is always this temptation to find ways of not reporting the abuse because it is not in the school's interests to do so."
PA
