Lead inspector Andy Waugh and his team carried out a week-long inspection of services delivered by Wolverhampton Council and its partners earlier this year.
They found that senior leaders "have led a relentless drive to improve services", leading to "innovative social work practice".
It was also found that social workers "make good decisions for children”, enabling them to “receive the right help at the right time".
Councillor Beverley Momenabadi, Wolverhampton Council's cabinet member for children and young people, said: "This is another very positive assessment of children's social care services in Wolverhampton.
"It not only recognises the vital work that the council and its partners do, day in and day out, for our city's most vulnerable children, young people and their families, but the very real impact it is having in helping to improve their lives.
"We are determined to continue the journey of improvement we have been on over the last few years – including throughout the Covid-19 pandemic – to raise standards even higher.
"We are pleased that inspectors have highlighted areas that are innovative and outstanding and we welcome their recommendations for areas where we can improve further still.
"I would like to take this opportunity to place on record my thanks to everyone working in children's services, both within the council and partner organisations, for their continuing dedication to ensuring that our children and young people are able to have the very best possible start in life."
Inspectors also found that children increasingly receive earlier interventions through Early Help services, reducing the number of youngsters who need statutory support.
Inspectors rated overall effectiveness to be Good, and within this judged the impact of leaders on social work practice with children and families to be Outstanding.
They also judged the experiences and progress of children who need help and protection, and the experiences and progress of children in care and care leavers, to both be Good.