The service run by Sandwell Children's Trust is now rated as 'good' by Ofsted, having previously been rated 'requires improvement'.
The trust was rocked by allegations of bullying and harassment in July.
Inspectors praised the body for the positive experiences children are now getting from the service, how well children are protected and the effectiveness of leaders and managers.
The team of foster carers who work with Sandwell's children in care were said to be providing "loving and stable homes" for vulnerable children.
Ofsted visited the service last month, shortly after allegations about its "toxic" culture were described in a whistleblowing book.
Sandwell Children's Trust was set up in 2017 after children's services were taken away from the borough council amid concerns over performance. It is chaired by former Home Secretary Jacqui Smith.
The book claimed more than 50 social workers had quit the trust "due to a toxic work environment characterised by bullying, harassment, victimisation (and) false allegations by line managers".
Trust bosses said they did not recognise the culture that was described but urged any staff to raise any concerns they had about working there.
Ms Smith, who served in Gordon Brown's Labour Government, said of the inspection: “We are really pleased Ofsted now recognises that we have made significant improvements in all areas of the fostering service at Sandwell Children's Trust.
"These improvements couldn't have been made without a team of really hardworking and dedicated staff who work tirelessly to give our children and their foster families the support they need.
"We also add to the praise given by Ofsted to our wonderful family of foster carers who dedicate their lives to making sure that our children achieve the best possible outcomes in their lives."
Chief executive Emma Taylor said: "This is a fantastic result for our fostering service, which recognises the hard work of our staff across the whole trust, plus our partners, especially our foster carers.
"As we take forward the recommendations to continue improving the service, this shows that by working together we can make significant progress, deliver good services and have a positive impact on our vulnerable children.
“There is an ambition here to improve all our services across Sandwell Children’s Trust and this outcome motivates us further to build on this and make further progress in order to make a difference to children in Sandwell.”