The last time the department was assessed by OFSTED in 2015, it was given the lowest rating of "inadequate".
Inspectors who visited in July say that after "a very slow start", there has been "a much-needed injection of pace" in the improvements made in the last six months.
OFSTED concluded that the county council - which is responsible for all of Lancashire except Blackpool and Blackburn - had now acted on key recommendations which the regulator made almost three years ago.
A report published after the month-long visit found that children are now more appropriately assessed when they first come to the attention of the service and that “prompt and effective action is taken to protect [them]”.
Social workers were also shown to have built more "stable" relationships with the young people in their care and the service was judged to be “more robust”.
But inspectors found that there was still "inconsistency" in the service provided and that there had yet to be a “cultural shift” from simply doing what regulations required to one where best practice was always followed.
Concern was also raised about the rate at which children are moved from early help schemes into more significant forms of intervention.
Leader of the Conservative-run council, Geoff Driver, praised staff within the department for the improvements made so far.
“The staff involved have worked really hard. They’ve demonstrated that they know what they’re doing and they’ve overcome the problems that they had in 2015...when we were in opposition.” County Cllr Driver said.
“All we can do at the political level is create the right structures and provide the necessary resources to allow them to do that. We’ve put our money where our mouth is, “ he added.
The council restructured its senior management team late last year, reintroducing an executive director with specific responsibility for children’s services. OFSTED concluded that the move had “contributed to the increased pace of change”.
John Readman took up the new post in January and said of today’s report: “While there is still work to be done...children’s services in Lancashire have started to improve and good progress is being made.
“We will now carefully consider the eleven recommendations made by OFSTED...so we can continue to develop this very important service,” he added.
Those recommendations include ensuring an effective range of early intervention is available to support families when they first need it and also that plans for children being helped by the department spell out “who needs to do what and by when”.
The adoption element of the service was singled out for particular praise and rated as "good". Inspectors found that the council was “strongly committed to considering adoption” when circumstances required it.
Other individual assessments of the service - regarding children who need help and protection, "looked after" children, the experience of care leavers and leadership performance - were all rated as "requires improvement", resulting in the same grading for the service overall.
Labour opposition leader Azhar Ali responded to the report by acknowledging that children’s services had “gone through a very difficult time since 2015”.
But he added that the previous administration had set up an improvement board and invested “millions of pounds”.
“Improvements don’t happen overnight, but this is a start,” County Cllr Ali said. “We now have to work towards the service being rated as good.”