Children as young as 11 were raped by multiple perpetrators, abducted, trafficked to other cities in England, beaten and intimidated it said.
The report, commissioned by Rotherham Council in 2013, revealed there had been three previous inquiries.
Five men from the town were jailed for sexual offences against girls in 2010.
Professor Alexis Jay OBE delivered the damning report at the town’s New York stadium and said there had been “blatant” collective failures by the council’s leadership, senior managers had “underplayed” the scale of the problem and South Yorkshire Police had failed to prioritise the issue.
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Prof Jay also said police “regarded many child victims with contempt” and that by far the majority of perpetrators were described as ‘Asian’ by victims”.
Announcing his decision to step down, Mr Stone staid: “I think it is only right that I, as leader, take responsibility on behalf of the council for the historic failings that are so clearly described in the report.”
In delivering her findings, Prof Jay said: “Several staff described their nervousness about identifying the ethnic origins of perpetrators for fear of being thought as racist; others remembered clear direction from their managers not to do so.”
“It is hard to describe the appalling nature of the abuse that child victims suffered.”
She said she found examples of “children who had been doused in petrol and threatened with being set alight, threatened with guns, made to witness brutally violent rapes and threatened they would be next if they told anyone”.
Failures by those charged with protecting children happened despite three reports between 2002 and 2006 which both the council and police were aware of, and “which could not have been clearer in the description of the situation in Rotherham”.
She said the first of these reports was “effectively suppressed” because senior officers did not believe the data. The other two were ignored, she said.
The inquiry team found that in the early 2000s when a group of professionals attempted to monitor a number of children believed to be at risk, “managers gave little help or support to their efforts”.
The report revealed some people at a senior level in the police and children’s social care thought the extent of the problem was being “exaggerated”.
Prof Jay said: “The authorities involved have a great deal to answer for.”
Rotherham Council has been heavily criticised in the past for ‘letting down’ victims of child sexual exploitation because of ‘systemic failures’.
South Yorkshire Police have also been criticised for failing to prosecute those suspected of offences against vulnerable girls.
Last January Rotherham Council’s chief executive Martin Kimber appeared in front of the House of Commons Home Affairs Select Committee to answer questions about the issue.
Chairman Keith Vaz asked why Rotherham had ‘failed so dismally’ to protect young women in the town.
The spotlight fell on Rotherham in 2010 when 17 year old Laura Wilson, was murdered by Ashtiaq Asghar after she threatened to reveal they’d had a sexual relationship.
A serious case review found Rotherham Council had missed ‘numerous opportunities’ to support her before her death and she was ‘almost invisible’ to some services, although workers could not have prevented the killing.
Following the case, a national newspaper claimed details from 200 restricted-access documents showed police and child protection agencies in Rotherham were aware for a decade that young women in the town were being groomed and yet nobody was prosecuted.