Thousands of bright children are being "systematically failed" by England's non-selective secondaries, education inspectors warn.
A culture of low expectations means England's able pupils are failing to gain top GCSE grades, Ofsted says.
Two-thirds of pupils, some 65,000, who achieved Level 5 in primary school maths and English tests failed to get A* or an A in both subjects at GCSE.
Head teachers questioned the statistical basis of Ofsted's claims.
Association of School and College Leaders general secretary Brian Lightman said: "I have real concerns about Ofsted's evidence base for drawing these conclusions.
"Level 5 is a wide band that includes a range of ability levels, not just the brightest students. The government has said that for children who come into secondary school with a Level 5, expected progress means a B at GCSE.
"Of course we want those children to achieve even higher, but for Ofsted to say that they are underachieving if they don't get an A or A* is unfair to those students and their teachers."
The report - The Most Able Students: Are they doing as well as they should in our non-selective secondary schools? - found more than a quarter (27%) of previously high-attaining pupils had failed to achieve at least a B grade in both English and maths.
Ofsted defines high-achievers as those achieving a Level 5 in both English and maths in national curriculum tests, commonly known as Sats taken in the final year of primary school.
Based on observations of 2,000 lessons, visits to 41 schools and school performance data, the report found staff in some non-selective schools did not know who their most able pupils were.
In 40% of the schools visited, the brightest students were not making the progress they were capable of, and many had become "used" to performing at lower levels, with parents and teachers accepting this "too readily", Ofsted said.
It said many schools did not track their most academically gifted pupils "sufficiently well" and it was critical of mixed-ability classes, saying they often saw "a lack of differentiation, teaching to the middle" with "the top pupils not being stretched".
The report said teaching was "insufficiently focused" for able pupils in the first three years of secondary school.
This was backed up by Ofsted chief inspector Sir Michael Wilshaw who said the most academically able arrived "bright-eyed and bushy-tailed" from primary school, but that things started "to go wrong very early" with low expectations.
"They tread water. They mark time. They do stuff they've already done in primary school. They find work too easy and they are not being sufficiently challenged."
He recommended school leaders consider streaming or setting pupils from the very start of their secondary education and called for parents to be given annual reports on whether their child was achieving as well as they should.
He told BBC Radio 4's Today programme he was "passionate" about pupils from comprehensives doing as well as those at selective schools, and ensuring the brightest students "go to the top universities so that we can become a fairer society".
"Leadership is absolutely crucial," he said. "Creating a culture of scholarship is really important, embedding learning and giving youngsters a sense of confidence, especially if they come from poor backgrounds."
School league tables, he said, had created "false incentives" for teachers, who were looking to push as many students as possible to get a C grade at GCSE, but teachers also needed to worry about whether the brightest pupils were achieving their potential, he stressed.
"We've got to believe as a nation that all our schools can be good and outstanding schools and achieve well by the children who go through them," he said.
"If we don't believe that, we might as well pack up and go home and we certainly won't succeed in the global race in terms of competition with our main international competitors."
Head teachers said the current government benchmark measure for schools in England - the percentage of pupils getting five GCSEs at grade C or above, including maths and English - was partly to blame.
Russell Hobby, general secretary of the National Association of Head Teachers, said: "For too long, schools have been forced into the middle ground, to get students over thresholds at the expense of both the most and least able.
"Education has become a numbers game, at the expense of the ethos and breadth that underpin a truly great education."
Shadow education secretary Stephen Twigg said the survey's findings were "very worrying".
"Michael Wilshaw is absolutely right that this cannot go on. Schools must set high expectations for all children... Lowering the benchmark for teaching cannot be good for children who need that extra stretch and challenge."
A spokesman for the Department for Education said: "Secondary schools must ensure all their pupils - including their brightest - fulfil their potential.
"That's why we are introducing a more demanding and rigorous curriculum, toughening up GCSEs and getting universities involved in A-levels."
But Chris Keates, leader of the Nasuwt teachers' union, said: "Yet again the teaching profession and parents will be deeply dismayed to see another ideological report condemning our education system.