Inspectors say "effective action" is being taken to move a pupil referral unit out of special measures.
Ofsted carried out a monitoring visit at the Kingston Centre, in Whitmore Reans, on 5 November, 2015, and noted a range of improvements which have taken place in recent months.
The centre, which helps prepare young people for a move back into mainstream education where appropriate, was placed into special measures following an inspection in February.
In their report published following last month's visit, inspectors noted evidence of improving pupil outcomes in English and mathematics, with staff increasingly providing pupils with work that challenges them to improve their knowledge, understanding and skills in these key areas.
They found a "much calmer teaching environment" which was promoting the learning of pupils, and also highlighted the work the school is doing to enable pupils to become responsible citizens, including taking part in regular charity events.
They added that interim headteacher Francesca Cannarella, who joined in September 2015, has quickly gained the confidence of staff and pupils alike and "re-energised the centre's work towards its aim of being an effective pupil referral unit".
Councillor Claire Darke, the City of Wolverhampton Council's Cabinet Member for Education, said: "This is an encouraging report which makes it clear that the Kingston Centre is moving in the right direction and on course to move out of special measures.
"I'd like to thank staff, led by Francesca Cannarella, for their efforts to rapidly improve outcomes for pupils and am confident that by maintaining this good progress the Kingston Centre will move out of special measures in due course.