Head teachers, governors and senior council education officers needed to play a more active role in tackling under-performance, said the report.
We found that in around a quarter of schools, head teachers and governors do not monitor performance carefully enough or challenge how well teachers and pupils are performing, said Ms Keane.
MOST schools in Wales are performing well, but literacy standards dont make pleasant reading, the countrys top education inspector has said.
We have seen a drop in the proportion of excellent or outstanding teaching by comparison with the last cycle of inspections, said Ms Keane.
Schools need to do more to adapt their materials and teaching styles to meet the needs of learners of all abilities. Most classes are mixed ability so its very important to plan different approaches.
Bryngwyn School in Llanelli was held up as an example of how to do this successfully.
Forty per cent of pupils enter secondary schools with a reading age that is more than six months below their actual age.
Estyn also inspected seven councils and found performance was good overall in only two.
It seems to us that a great deal of time has been spent diagnosing the health of the Welsh education system over the past year: and there has been a large measure of agreement about the issues that need to be tackled, said Anna Brychan, director of teaching union NAHT Cymru.
Ms Keanes comments came as Estyn published its annual report for 2010-11 — a look at standateaching schoolsrds and performance of schools and training providers in Wales.
The foundation phase, for three to seven-year-olds, was a strength in most schools with boys and girls described as independent, confident and creative.
Top inspector warns on schools literacy levels? teaching schools,Ann Keane, chief inspector of Estyn, said performance in 80 per cent of primary schools and 66 per cent of secondary schools inspected was mainly good.
Standards were also mixed in post-16 education. They ranged from excellent to unsatisctory in four institutions offering further education, aTop inspector warns on schools literacy levels? teaching schoolsnd from excellent to adequate in three providers of adult community learning.
The report said most schools did not do enough for Gypsy-traveller children, and that their attendance rates were still too low.
A further 20 per cent of schools needed follow-up visits by councils, despite gaining largely good inspection judgements.
And Ms Keane warned: We have concerns about standards in reading and writing in a significant minority of primary schools.
Nearly all pupils, meanwhile, said they felt safe at school and had plenty of chances to exercise, although PE attendance rates were slow to improve.
Schools are being banded by the Welsh Government in a separate exercise.
Another area of weakness in most schools was the variation in teaching quality.
Some 25 per cent of schools required follow-up visits by Estyn, including five per cent that were causing serious concern.
This is unacceptable. Teachers and managers need to plan lessons more effectively to develop pupils literacy and numeracy skills in all subjects.
