Ofsted is concerned about provision though it notes improvements
The popularity of information and communication technology is declining rapidly in school despite its importance in adult life, Ofsted says.
In 2007 there were 45% fewer girls taking A-levels in the subject than in 2004, and almost a third fewer boys.
Teaching in some English schools is lagging behind and many pupils are taking qualifications of "doubtful value", the school inspectorate said.
The schools minister said the report showed "good progress" was being made.
Ofsted's report reveals that more and more pupils are taking vocational qualifications at Key Stage 4 (age 15-16) than GCSEs.
Such qualifications are worth four GCSEs in school league tables, but Ofsted says they "offer limited challenge".
It describes the situation as "serious" because it leads to fewer pupils studying ICT in the sixth-form, despite its increasing importance to our adult working lives.
And the falling numbers of pupils sitting national qualifications troubles inspectors because many expressed enthusiasm for the subject, they say.
The proportion of pupils taking double award GCSE or the shorter GCSE has fallen by a third since 2004, according to the report.
And the proportion of girls studying computing after the age of 16 has fallen to an all-time low, Ofsted added.
In 2007, there were 13,360 A-level exam entries - 1.7% of the total.
And A-level results are poor in comparison to other subjects.
'Not being challenged'
"The Key Stage 4 curriculum was inadequate in around one-fifth of the schools visited; assessment was unsatisfactory in a similar proportion, and many students were following qualifications of doubtful value," Ofsted's report notes.
Schools should evaluate to what extent these qualifications are challenging pupils, it says.
Chief inspector of schools Christine Gilbert said schools must equip pupils effectively with ICT skills.
"ICT needs to be given high status, both by the government and in individual schools, in line with its importance to young people's future economic well-being," she said.
The Ofsted report was based on evidence gathered from inspections of information and communication technology in 177 maintained schools in England and some additional visits to schools where practice was identified as good.
It tracked schools' performance in the subject between 2004 and 2007 and found steady improvements, particularly towards the end of the evaluation.
But achievement remained "stubbornly low" in some schools.
Higher-attaining pupils were not always being stretched, Ofsted added.
In the weakest providers, links between ICT and other subjects were not made, but in the best, ICT resources were spread across the teaching of all subjects - and not merely available in a computer room.
Schools Minister Jim Knight said he was "pleased the report recognised that most schools were making good progress in ICT".
He added that he wanted primary pupils to learn ICT skills early so that by secondary school, they could "concentrate on using them in an engaging and exciting way".