Medway Secure Training Centre in Rochester, Kent, remains inadequate after inspectors' "serious concerns".
Children "are at risk of harm", and one was prevented from accessing hospital treatment after self-harming.
One area, children's education, was deemed to be good by inspectors.
A Ministry of Justice (MOJ) spokesperson, said: "Medway holds some of the most challenging young people in the country and our staff work tirelessly to keep them safe - but, given safety is our priority, this is a disappointing report and we need to do more."
Children's health, their resettlement, how well they are protected and the effectiveness of leaders all required improvement or were inadequate.
Despite three Ofsted inspections since 2017, the report out this week found managers failed to implement recommendations and the quality of practice has declined.
The use of force has increased "significantly", with approximately two incidents every day - nearly half of which were in response to a child self-harming.
Ofsted has told centre staff to immediately stop their use of pain-inflicting techniques while physically restraining children.
Inspectors said it was also "unacceptable" that when healthcare staff decided one child required hospital treatment after self-harming, centre managers did not allow it due to the child's "challenging behaviour".
In another instance, a serious allegation of abuse was not referred to relevant authorities.
Children continue to spend some days locked in their rooms due to staff shortages, meaning they miss out on activities they earned through good behaviour.
In addition, the dignity of youths is not always maintained, with some strip-searches being carried out against protocol, in the presence of officers who are not the same sex as the child, or with more officers present than necessary.
Following a number of internal promotions since the last inspection, the management team has changed, however recruitment and retention of front-line staff continues to be a problem, the report states.
However, children did tell inspectors they can confide in some members of staff, and they generally feel safe in the centre.
Inspectors highlighted a "relaxed atmosphere", and a much improved and "homely" environment.
Thanks to good teaching, children also make fast progress.
The centre has supported the "vast majority" of children released in securing a school or college placement, and a local construction company has supported 10 children with obtaining their construction skills certification scheme (CSCS) card and undertaking plumbing courses.
The MOJ spokesperson added: "We have acted quickly to introduce a new rapid review process for every use of restraint and the independent review we commissioned into the use of pain-inducing techniques will be published in the New Year, alongside the actions we will take as a result.
"Medway will close in the spring so the site can be transformed into the first ever Secure School, representing a major step towards our commitment to putting education at the heart of youth custody."
At the time of the inspection in October there were 29 children at the centre.