MPs have called for an end to single-word Ofsted judgments after school inspections.
The cross-party education select committee's report also said schools should not be automatically graded "inadequate" for minor safeguarding concerns.
But it said most in the sector still wanted "strong accountability" in schools.
Ofsted welcomed the report and said it would respond to its recommendations.
Changing one or two-word judgments - like "inadequate" or "requires improvement" - can only be done by ministers.
The report said there was "general agreement" between school leaders, teachers, parents and others, on the need for an independent inspectorate for schools.
But it said relationships with Ofsted had become "extremely strained" and trust was "worryingly low".
The appointment of Sir Martyn Oliver, the new chief inspector, in January represented a "crucial opportunity to reset and restore these relations", the report said.
The committee's inquiry ended just weeks after the conclusion of the inquest into the death of Ruth Perry, who took her own life after an Ofsted inspection at her school in November 2022.
She had been head of Caversham Primary, in Reading, Berkshire, for 13 years.
A coroner said the inspection, which was at times "rude and intimidating" and downgraded her school to the lowest rating, "inadequate", contributed to her death in January 2023. The school has since been regraded as "good".
