An inspection by the Care Quality Commission and Ofsted found "significant areas of weakness" in provision for older children and young people with special educational needs and disabilities (SEND) in the city.
It highlighted case review delays and said youngsters were being let down by support not being put in place quickly enough.
The report looked at how Wolverhampton Council, the Black Country and West Birmingham Clinical Commissioning Group (CCG) and The Royal Wolverhampton NHS Trust among other bodies, identify and meet the needs of young people with SEND.
It said there were "significant concerns about the effectiveness of the area" due to a lack of accuracy in individual plans, weaknesses in how local bodies worked together and delays in identifying needs and providing support.
The city has been ordered to urgently submit a written statement of action (WSOA) outlining planned improvements.
The report said: "Children in their pre-school years have their additional needs spotted swiftly and have timely access to high-quality support.
"However, too many older children and young people do not, and their parents and carers told inspectors of having to fight to get their child’s needs identified and then waiting too long for their child’s needs to be assessed.
"This causes a great deal of upset for many parents and carers. In addition, these children do not make the progress they should because the support they need is not in place quickly enough."
It said the quality and timeliness of education, health and care (EHC) plans were "very poor" in some cases, with an annual review backlog of 200 cases contributing to a lack of urgency in identifying additional and changing needs
A significant number of health and education professionals said that EHC plans often did not reflect their recommendations, the report added.
It said Child and Adolescent Mental Health Services (CAMHS) waiting times were "too long", and that social care support did not get involved early enough in identifying needs.
Leisure and social opportunities were "difficult to access" in the city, according to the report, transitions from one educational setting to another were "frequently not well planned or considered".
The report said provision for children with SEND in early years was a strength, along with the development of school outreach services.
The city's Impartial Advice and Support Service (WIASS) was described as a ‘lifeline’ to many parents, carers, young people and schools.
The report concluded that "long-standing and embedded weaknesses and systemic failings" in implementing SEND reforms mean that the city’s aim of "every young person achieving an ‘ordinary life’ remains some distance off".
Inspectors said the negative impact of Covid had been taken into account in their report.
Conservative group leader Councillor Wendy Thompson said the report was "incredibly concerning"
"Reading the report the weaknesses of the service clearly outweigh the strengths and this needs remedying as soon as possible," she said.
"The report is clear that whilst Covid has had an impact, this should not be used as an excuse as the report states that within the service there are 'long-standing and embedded weaknesses and systemic failings'."
Councillor Thompson said shortcomings in areas such as CAMHS, which the Conservative Group had "repeatedly raised with council leaders", and the timeliness of the completion of EHC plans were also a concern.
She added: "The council urgently need to grip this issue to ensure no young people or families are let down."
Councillor Dr Michael Hardacre, Wolverhampton Council's cabinet member for education and skills, said there were "no surprises" in the report and conceded that the authority was "not yet at the point we want to be" regarding SEND services.
He said areas identified for improvement including the timeliness, quality and consistency of Education, Health and Care Plans and the need to develop a joint commissioning strategy were already key priorities in the city's SEND strategy.
"We believe the robust written statement of action which is in development will put partners in a good place from which to drive forward the necessary improvements to ensure that all our children and young people with SEND and their families get the help and support they deserve," he said.
Sally Roberts, chief nurse for the Black Country and West Birmingham CCG, said: "It is clear that the pandemic has negatively affected access to some health services and I am aware of how unsettling any wait can be for a child and their family in need of support.
"Improvements are happening as our services restore and we will be working with partners to take steps to ensure we are able to offer better support for children and families with their health and educational needs moving forwards."