Thousands of children are attending suspected illegal schools – some of which are in “appalling” condition with exposed wiring, rat traps and open sewers.
Ofsted said it believed the quality of education at more than 200 settings was sub-standard, with one letting youngsters play computer games all day.
The inspections body also said some of the unregistered schools were Alternative Provision (AP) funded by the local authority.
It revealed that one unnamed council paid £27,000 per pupil, per year, to place a child in this setting.
On Friday, Ofsted released figures showing that since 2016 it has investigated 521 settings, and inspected 259 in England.
It estimates that up to 6,000 children are being taught at the sites it has visited to date.
Almost a quarter (23%) of the settings investigated are in London, with the rest spread fairly evenly across the country.
Ofsted said AP is the most common type of setting (28%).
Around a quarter (26%) of the settings are general education providers, and a fifth (21%) are places of religious instruction.
Sue Will, senior officer at Ofsted, said: “Some of the buildings that we have been to are in really poor state – unsafe.
“I have been really shocked at the health and safety issues that we have seen – I mean quite appalling.
“We are not just talking about run down places that could do with a lick of paint, we are talking about some not very nice places at all.
“Open sewers, rat traps in rooms, I have seen portacabins balanced on portacabins to maximise space, exposed electrical-ware, I’ve seen holes in walls and floors, I have seen locked fire doors, I have seen holes where children have probably punched plaster walls.
“That is the bit for me that I always find so shocking.
“When you think that every child in this country is entitled to a free school place, and sometimes I come away from these places and think ‘why, why would you send your child here?’.”
Ofsted’s deputy director of independent and unregistered schools Victor Shafiee, added: “It just isn’t good enough that vulnerable children – a lot of these children are – isolated children, end up in these places where there is no oversight, no quality assurance.
“In truth, unregistered schools are a bad thing.
“They are bad for the children who go to these settings because they are robbed of their life chances.
“They are bad for the parents, because in some cases the parents are misled. They are misled in thinking this is a school and it is operated.
“People hang on to the bottoms of lorries, and jump trains to get to this country because education is free.
“So why would you then send your child to an unregistered school and pay for them to go to these settings? It is something that I find unfathomable.”
In total, 71 settings have been issued with a warning notice by inspectors.
The data shows that 15 of those settings have since closed, while 39 have changed the way they operate in order to comply with the law, and nine have registered as independent schools.
To be required to register as a school, a setting must be providing full-time education to at least five children of compulsory school age, or one child who is looked after by the local authority or has an education, health and care plan.
It must operate from a building, and must offer a curriculum that includes maths and English.
There is currently no legal definition of “full-time education”, but the Department for Education (DfE) has issued guidance to say that 18 hours or more a week is likely to constitute full-time education.
However, Ofsted says some providers circumvent the requirement to register by operating for 17 hours and 50 minutes per week.
A DfE spokesman said: “Today’s data shows why our new register of children not in school is so important.
“Illegal schools are unregulated and present a danger to both the quality of education and the welfare of those children who attend them – a register will vastly improve councils’ capacity to identify those children and intervene.
“We have already established a joint team with Ofsted and provided them with £3 million to investigate these settings, and continue to work with them and the Crown Prosecution Service to make sure illegal activity is uncovered and justice is delivered.”
Ofsted says children in unregistered settings are potentially at risk because there is no formal external oversight of safeguarding, health and safety or the quality of education provided.