The Oswestry School Prepcare Nursery was praised for its nurturing staff and the rich and varied curriculum.
Inspector Scott Thomas-White was impressed to see two-year-olds serving their own lunch and clearing away after themselves.
Deputy manager, Hannah Miller, said: "We are extremely proud of our recent Ofsted report which is a reflection of the hard work and dedication of our fantastic team of staff.
"We gained a ‘Good’ overall grade but we are delighted to have achieved an ‘Outstanding’ grading for ‘personal development, behaviour and welfare’. We pride ourselves in the care and educational opportunities we offer to the children and it is wonderful to have gained recognition from Ofsted for this."
The report said: "Staff are exceptionally nurturing and this helps babies to form strong bonds and attachments. Children feel secure from a young age and develop exceptionally high levels of confidence as they progress through the nursery. Leaders work hard to ensure the curriculum is rich and varied for children.
"The manager uses the views of others, such as children, to promote continual development. For instance, using children's suggestions, staff have increased children's independence at lunchtime.
"Children as young as two years serve their own food and clear away their own plate."
Hannah said that the staff would continue to keep working hard and building on the achievement to ensure they offered the very best nursery experience that they could.
There will be an open morning on June 8 from 10am to 1pm.