Colette Hume BBC Wales education correspondent

The number of school exclusions is rising

Estyn's annual report found only 40% of 16-year-olds had gained good GCSEs in English or Welsh, maths and science.

However, chief inspector Susan Lewis praised the standard of lessons.

But she also said every day about 20,000 children were missing from secondary school - the equivalent of 20 schools across Wales being empty.

Ms Lewis, who launched Estyn's annual report on a visit to Barry in the Vale of Glamorgan, was concerned about progress in core subjects for teenagers.

She said: "By the end of their time in compulsory education only about 40% of 16 year olds have gained good GCSE or equivalent qualifications in Welsh or English, mathematics and science.

"During recent years, these results have improved only slowly."

Local authorities are failing to give pupils who are permanently excluded from school the full 25 hours a week of education Susan Lewis, chief inspector of schools

The report said underachievement was often accompanied by problems with attendance, bullying and anti-social behaviour.

Many schools, it says, were working more closely with youth support services, other providers, parents and communities to try to overcome these problems.

The report also highlights the continuing problems surrounding school attendance.

Every day around 20,000 children are missing from secondary schools.

Some were absent because their parents were taking them on term time holidays, but the majority were playing truant.

'Sound foundation'

"On recent performance, secondary schools are unlikely to meet the Welsh Assembly Government target to reduce absenteeism to below 7% by 2007," said Ms Lewis.

The number of pupils being excluded from school is rising. The most recent figures show 20,242 pupils were excluded for fixed periods - compared with 16,530 in 2003-4.

While from 2004-05 the number of permanent exclusions from mainstream schools have increased by just over 10%.

Estyn said only one in seven permanently excluded pupils move to other schools. Special pupil referral units provide education for 10 per cent of excluded children.

We remain on track to realise our ambition that Wales will be a country where everyone has the opportunity to learn and prosper Jane Davidson, education minister

"Local authorities are failing to give pupils who are permanently excluded from school the full 25 hours a week of education," the report says.

But there was praise for the standard of lessons, with 73% of lessons for pupils of all ages inspected by Estyn being given two grades.

The report says there was very little unsatisfactory work, describing the position as a "sound foundation for the Welsh Assembly Government's targets on standards."

Further education colleges inspected for this year's report also met assembly government targets, with 81% of work described as "good" or "very good".

Standards in subjects including hair and beauty, hospitality and catering, leisure, travel and tourism were among those described as "outstanding."

More than three quarters of lessons had what were described as "good" or "outstanding" features.

Ms Lewis said "overall colleges are doing better than the Welsh assembly government's targets for learner achievement and for the quality of the teaching".

'Revolution'

But there were still serious concerns about work-based training.

Nearly half of training providers still had unsatisfactory standards this year compared with 28% last year.

Commenting on the report, Education Minister Jane Davidson said it provided an overview of the progress made in just about every area of education and training.

"I was pleased with her conclusion that providers in most sectors have improved a great deal since they were last inspected," she said.

"We have begun a revolution in education and lifelong learning in Wales. This report confirms that we remain on track to realise our ambition that Wales will be a country where everyone has the opportunity to learn and prosper."