Ofsted inspections need to be radically overhauled, with lesson observations ditched and short one-day checks made on schools every two years, a think tank has said.
It also called for detailed "tailored" inspections for schools that are not up to scratch, and for Ofsted to drastically reduce its reliance on inspectors who work for private firms.
The report, by the Policy Exchange, suggests that routine classroom observations are "neither valid nor reliable" in their current format, and raises serious concerns about the quality of some inspectors.
It says that while an independent schools inspectorate is a vital part of the education system, major changes need to be made.
This includes Ofsted addressing schools' lack of faith and confidence in the system.
The report concludes that routine lesson observations - a key part of school inspections - are of little benefit, with growing concerns about how good they are at judging teacher quality.
Recent research concluded that observations by inspectors are often unreliable, with around a fifty-fifty chance that the inspectors will judge a lesson to be of the same standard as data on pupil progress shows it to be.
Observations have also led to schools holding "mock inspections", preparing "Ofsted lessons" or a checklist of outstanding classes in a bid to get a good rating, the report says.
It adds that there is also still a view, and evidence, that inspectors prefer certain methods of teaching, despite Ofsted attempts to change this.
This has meant that many schools are not willing to make changes to how they operate for fear of getting a bad rating.
"At its heart, any practice of an external observer judging quality of teaching in the way it is structured at present is unlikely to command the confidence of schools, and is likely to drive perverse consequences," the report says.
"This is why this report recommends a more widespread change to the practice of school inspections, with the removal of lesson observations as standard practice from all schools during an initial inspection."
The report goes on to call for a new two-stage inspection system.
Under the shake-up, all state schools - including academies and free schools - would face a "short inspection" lasting one day every two years. This would give schools an overall rating, plus a second on their ability to continue to perform at a certain standard.
Schools that fall below outstanding or good would face a second "tailored inspection" with twice as many inspectors assessing it as would do under the current system.
This would give inspectors time to understand the school and its data and explore any issues, the report said.
The think tank also urges Ofsted to give serious consideration to either scrapping or drastically cutting down on the number of inspectors who are contracted to private companies.
Under the current system, around three contractors employ around 3,000 inspectors, half of whom conduct school inspections. Ofsted directly employs 300 to 400, with around 150 working in schools.
Many inspectors do not have relevant experience or specialist knowledge or are unable to analyse and interpret data properly to come to the right conclusions about a school.
As a result, schools end up making decisions based on what they think inspectors want and will understand, rather than what is best for their pupils.
The think tank calls for all inspectors to have relevant and recent experience in the type of school they are assessing, and to pass exams on interpreting data.
Report author Jonathan Simons said: "At the moment a team of external observers watching a handful of lessons can make a judgment on the quality of teaching which trumps the view of the school itself. The evidence suggests that when it comes to relying on judgment of a trained Ofsted inspector on how effective a lesson, you would be better off flipping a coin.
"More needs to be done to drive up the quality of inspectors. Heads and teachers must feel confident that the person running their eye over their school is a specialist, preferably with recent teaching experience. Inspectors don't need to be rocket scientists but they must also have the ability to interpret the increasing amounts of data on the performance of schools, and understand the different ways in which schools are now operating. Schools should not be forced to second guess what the inspector coming through the door will be like."
Michael Cladingbowl, Ofsted's national director for schools, said: "Ofsted has played a major part in raising standards in England's schools over the past 21 years. We are now looking at how inspection should develop in the coming years to reflect the fact that eight out of 10 schools are now good or outstanding."
He went on: "Headteachers tell me that schools would benefit from more regular contact with Her Majesty's Inspectors and we know parents would value more up-to-date information.
"In my view, parents will always expect inspectors to spend time in classrooms when they visit a school because teaching is the heart of what schools do.
"While we do not judge individual teachers, visiting lessons is a key way of gathering evidence about the quality of teaching in the school overall.
"Inspectors also take account of the school's own views of teaching, undertake joint evidence gathering with senior leaders, look at children's work and teachers' marking, discuss test and examination results, and talk to parents, pupils and staff."
Brian Lightman, general secretary of the Association of School and College Leavers (ASCL), added: "Getting the inspection service right is crucial, not only for the quality of our schools, but for the recruitment, retention and well-being of good heads and teachers. Inspection has an important role in holding schools to account, and when done well it can be very effective."
He added: " Lesson observation will always have a place within inspection. I cannot see how an inspector could make an overall judgement about a school without seeing what happens in the classroom. However Ofsted is absolutely right to say that there is no one correct teaching style, and that inspectors should not try to grade individual lessons."
The publication of today's inquiry comes weeks after a row broke out after it was reported that two right-wing think tanks - Policy Exchange , which was set up by Education Secretary Michael Gove and Civitas were examining the role of Ofsted.
Ofsted chief inspector Sir Michael Wilshaw hit out in the wake of the reports saying he was "spitting blood" and accused Department for Education (DfE) staff of briefing against him
Mr Gove issued a statement voicing his full support for Sir Michael and the Ofsted boss later told MPs that in retrospect he made have made an error in speaking out before checking the facts, saying his comments were ''a spontaneous act of fury''.