The English education watchdog, Ofsted, must prove it offers good value for money and improves standards in troubled schools, MPs say.
School inspections should be backed up by extra support, MPs say
Inspections on their own did not help those schools with "serious weaknesses" get better, according to a Commons education select committee report.
Often, the schools were not given adequate advice or support afterwards.
Criticism by Ofsted could cause a "spiral of decline", as teachers and students became disheartened.
Now that Ofsted is the size of a government department and consumes a "massive" amount of public money, it should make extra efforts to prove its worth, said the committee chairman, Labour MP Barry Sheerman.
This was particularly required as it expanded its responsibilities to cover children's services.
Mr Sheerman said: "It is an urgent priority for it to prove convincingly to schools, parents, teachers and taxpayers that this massive investment in inspection leads to substantial improvements in standards."
The committee had been told of an increase in the number of schools in "serious weaknesses" - an official term which is one step away from failing.
Mr Sheerman said: "The government should ensure that schools which receive negative Ofsted reports are guaranteed to receive support from LEAs (local education authorities) as well as other agencies ... giving failing schools a real opportunity to improve."
Earlier this year, a report commissioned by Ofsted into its own image within schools found the most thought of inspections as "free consultancy".
It added that one million children had benefited from the improvements made to schools identified as requiring special measures - those given a deadline to improve or face closure.
An Ofsted spokeswoman said it was "generally regarded as an efficient and effective department".
It also met "performance and budgetary targets", with the cost of inspections being around £20 per pupil for their entire time at school, or the equivalent of less than £2 per year.