There are "serious and widespread failings" at Sandwell Council's children's services, an Ofsted inspection has found.
Services for looked after children and adoption "deteriorated" since they were last inspected in 2015.
Ofsted rated the services inadequate.
The Labour-run authority said it was "fully committed" to improving and was "disappointed in the outcome" of the re-inspection.
A total of four out of five assessed areas were given the rating, including the 'help and protection' of children.
The report said the "basic elements of good social work" were not yet in place at the authority and that the response to children going missing or at risk of sexual exploitation "lacks rigour".
The health needs of looked after children were mostly well-met but their educational attainment was lower than the national average, the report said.
Last year the government announced it would introduce an independent trust to run children's social care services in the borough.
The trust will take over on 1 April with former Home Secretary Jacqui Smith as independent chair.
Ms Smith said the hard work was "just beginning".
"We are under no illusions about the size of the challenge ahead of us as we move towards launching the Sandwell Children's Trust.
She added: "It remains an exciting and real opportunity to improve the lives of the most vulnerable children and families in Sandwell."
Councillor Simon Hackett, cabinet member for children's services, said there is "much work to do".
Last week Conservative MP for Halesowen and Rowley Regis, James Morris, spoke in Parliament about the failings of the authority and described children's services as a "broken system".
On Monday, he called for council leader Steve Eling to step down over the latest report.