One principal described it as "soul destroying" for students who make individual progress but remain "below" the standard.
Another said the system had "led to a deterioration in the educational deal our children are receiving".
The report highlighted a number of recurrent concerns, including a belief the system narrows the curriculum as teachers are forced to teach to the standards and they don't accurately reflect student's ability.
"Few of those who worked most closely with students thought National Standards had made a positive impact on students' achievement overall," the report says.
Teacher support for National Standards remains low - at 35 per cent.
Less than half of teachers (48 per cent) thought National Standards results provided a reliable picture of student performance in their school, saying the data did not reflect pupils' achievements beyond reading, writing and maths.
One principal described National Standards as "a joke", saying "data coming to us from schools when students enrol here is highly unreliable".
A student arrives - report states, 'working towards' and we find they are 'well below' and the parents have no idea.
One teacher described the method as a "terrible way to measure student achievement".
The response from teachers indicated National Standards were affecting how and what they teach, the report said.
"The overall picture was of a sharper focus on accelerating learning for students not achieving National Standards, accompanied by a narrowing of curriculum they teach."
Nearly 70 per cent of teachers believed the standards had narrowed the curriculum, up from 50 per cent in 2013.
"I find the whole push for acceleration very dangerous as many children are getting insufficient consolidation and fall down later because they do not have a solid grounding," one teacher said.
About three quarters of principals (74 per cent) thought the standards did not help with the inclusion of students with additional learning needs.
The figure was 73 per cent among teachers, with an additional 19 per cent unsure.
One principal said they "particularly object" to using National Standards for special needs children, describing it as "stupid and demeaning" to judge those pupils against the measure.
Parents had a similar dim view of National Standards, with barely half of parents and whanau surveyed agreeing they provided a valuable picture of their child's learning.
Such a poor picture of the standards raised questions over their continued role in the education system, the report said.
This was echoed by the New Zealand Educational Institute (NZEI) which said the report was the latest evidence that National Standards should be dropped.
"This survey deals a huge blow to the credibility of National Standards and shows how dangerous it would be to use them as the basis of any future school funding system," president Louise Green said.
"National standards have failed to achieve the two purposes they were set up for - lifting achievement, and giving parents better information about the progress of their children."
However, the Ministry of Education denied the report showed the standards were failing, and said it showed they were "working as intended".
"We have made good progress, but there is still work to do to raise achievement levels over time," head of early learning and student achievement Carl Le Quesne said.
National Standards were having a positive impact on student achievement, he said, and getting extra resources to children who needed them.
"More students are achieving 'at' or 'above' the National Standards for maths and reading than ever before," Le Quesne said.
Work had been done to improve consistency of standards, he said, and help teachers make sound judgments.
BY THE NUMBERS:
16% - teachers who agreed the impact of National Standards on student achievement overall has been positive
20% - said the standards helped motivate students to take on new challenges
23% - principals and teachers who believed National Standards data provided a valuable picture of student learning
35% - teacher support for National Standards
40% - thought a focus on literacy and maths had taken attention away from other aspects of the curriculum
48% - teachers who thought National Standards results provided a reliable picture of student performance
51% - parents who thought National Standards provided a valuable record of their child's learning
63% - teachers who reported anxiety about their performance in National Standards had negatively affected some students' learning
69% - teachers who believe the standards have narrowed the curriculum
83% - teachers who reported feeling pressure to accelerate students through levels to reach a particular point by a certain age
