Management of the nursery where paedophile Vanessa George sexually abused youngsters was severely criticised in an official report today.
The review of the scandal at Little Ted's in Plymouth concluded there was no indication "any professional could have reasonably predicted that George might be a risk to children".
But it also said there appeared to have been a "complete lack of recognition" that her increasingly strange behaviour after the break-up of her marriage had crossed boundaries.
Self-styled "paedo whore mum" George, 40, who was jailed indefinitely last year, took photographs on her phone of herself abusing toddlers and shared them with fellow paedophile Colin Blanchard.
A summary of a Serious Case Review commissioned by Plymouth Safeguarding Children Board after the scandal pointed to what it said was weak management at Little Ted's, which closed immediately after George's arrest.
The review said Little Ted's "provided an ideal environment within which George could abuse" and it was critical that Ofsted inspections failed to spot shortcomings.
It concluded that the management culture allowed the abuse to happen and lessons needed to be learned but "ultimate responsibility for the abuse must rest with George".
The report said there was a lack of safe recruitment procedures, an informal recruitment process and lack of formal staff supervision.
Following interviews with George's colleagues and parents, it was apparent that Little Ted's did not provide a safe, positive environment for children in its care, the report stated.
It said: "This would indicate that either the individual (Ofsted) inspections were not rigorous enough, or the framework for inspection is not adequate."
The report said it was not seen as significant that George began using a cubicle to change nappies rather than the general changing area.
Staff did not report concerns about her openly discussing her sex life or showing them inappropriate images on her mobile.
"The escalation of George's behaviour should have prompted a response by the manager of the nursery, but it did not do so.
"There appears to have been a complete lack of recognition of the seriousness of the boundary violation and a culture within the nursery where explicit sexual references in conversation were the norm."
The report said a culture developed at Little Ted's where staff felt unable to challenge George's increasingly inappropriate behaviour.
"Staff working Z (at the nursery) were becoming increasingly uncomfortable and worried about K's (George) behaviour yet had nowhere to go with these feelings," it said.
Police believe George came into contact with nearly 200 children while working at Little Ted's but she has refused to identify her victims.
Her descent from a working mother-of-two into a double life of depravity began with the breakdown of her marriage.
She had no known sexual interest in children until she met Blanchard, 40, on Facebook.
George became part of a paedophile ring featuring four women and headed by known sex offender Blanchard, from Rochdale, Greater Manchester.
The ring unravelled as police began an investigation into pornographic pictures found on Blanchard's computer by a colleague.
Their inquiries led to George, single mother Angela Allen, 40, of Nottingham, adult carer Tracy Dawber, 44, of Southport, Merseyside, and mother-of-nine Tracy Lyons, 40, from Portsmouth, Hampshire.
George and Blanchard never met in person, recording the abuse on their mobile phones and exchanging the pictures via email.
George, who had an NVQ level 2 in childcare, joined Little Ted's in September 2006 as deputy special educational needs co-ordinator and nursery assistant.
After the breakdown of her marriage she began searching the internet to meet men for "a bit of fun" - even offering sex to one man in exchange for an MOT for her car.
After making contact with Blanchard the twisted pair exchanged more than 7,000 explicit messages, emails and calls until his arrest in June 2009.
George admitted seven sexual assaults and six counts of making and distributing indecent pictures of children.
Jim Gould, chairman of the Plymouth Safeguarding Children Board, called for the Government to introduce legislation to "strengthen accountability frameworks for nurseries".
"The recommendations are already being implemented locally and we hope that the report will be used to help protect children around the country," he said.
He added: "We would also like to see Ofsted strengthen the inspection of nurseries to ensure there is a culture in all nursery settings that maximises the safeguarding of children."
Ofsted said it took its role in the inspection and regulation of nurseries "extremely seriously".
Patrick Leeson, the regulator's director of education and care, said: "It is important that lessons are learnt from this case.
"Ofsted has already implemented a number of changes in the way we work as a result of this review and to address the recommendations made."
The Department for Education said an ongoing review would consider whether standards for protecting young children need to be strengthened.
"This was a shocking case of abuse of children. The Serious Case Review by Plymouth Safeguarding Children Board identifies important lessons that all early years settings need to learn from so that vulnerable children are better protected in future," a spokesman said.
But one mother, who is in regular contact with many other parents, told The Herald in Plymouth: "I want to know how it happened, how no-one ever knew what went wrong and what changes are going to do to make sure it can't happen again."
Another asked: "Was it complacency? We know she was a devious cow, but how much could have been avoided?
"We just want an end to it, but for many of us it'll never go away because she won't divulge the names of those she abused."
One father said he hoped the review would lead to a change in the rules on the use of mobile phones in nurseries and schools.
"Having mobiles in there, especially now they all have cameras, was such a simple mistake, but with such phenomenal consequences," he said.