The number of children in care has risen to its highest level for nearly 25 years following the death of Baby P and a spate of child sex exploitation scandals, the Government's spending watchdog has said.
Some 68,110 children were being looked after by local authorities in England at the end of March 2013 - a 14% increase since 2008, a report by the National Audit Office (NAO) found.
The "rapid rise" in children in care followed coverage of Baby P's death in 2007, while almost every local authority said they were expecting or experiencing an increase in referrals linked to child sexual exploitation after high-profile cases in Rotherham and other towns, the NAO said.
It comes as auditors warned that children in care do less well in school than their peers and are more likely to experience problems in later life.
Some 15% of children in care achieved five or more GCSEs at grades A* to C including mathematics and English in 2012/13, compared with 58% of children not in care, the NAO said.
Meanwhile, 34% of 19-year-olds who were in care aged 16 were not in employment, education or training (NEET) at the end of 2013 - compared with 15.5% of 18-year-olds, the watchdog added.
The NAO warned that while demand for care continues to rise and varies "significantly" across the country, the Department for Education (DfE) has not shown it is meeting its targets for improving care for foster children and those in residential homes.
There had also been "no improvement" in the last four years in getting children into the right placement first time, they said
Children and families minister Edward Timpson said the NAO report was "fundamentally flawed" and ignored the "real progress" being made to transform the life chances of children in care.
Amyas Morse, head of the NAO, said: "Most children are taken into care because of abuse and neglect. But too many of them are not getting the right placements the first time.
"If their complex and challenging learning and development needs are not correctly assessed and tackled, the result is likely to be significant long-term detriment to the children themselves as well as cost to society.
"No progress has been made in the last four years."
Peter Connelly died in north London, on August 3 2007 at the hands of his mother, Tracey Connelly, her lover, Steven Barker, and their lodger, Jason Owen.
He had suffered more than 50 injuries despite being on the at-risk register and receiving 60 visits from social workers, police and health professionals over the final eight months of his life.
According to the NAO, the number of children in care is now the highest since records are available from 1990.
It found that nearly two thirds (62%) of children in care were there because they had suffered abuse or neglect. Three quarters (75%) of those in care were fostered.
In total, £2.5 billion was spent supporting children in foster and residential care in 2012/13 - a 3% increase in real terms since 2010/11.
The report found 34% of children in care had more than one placement in 2012/13 - the same proportion as 2009.
Local authorities also failed to place children within 20 miles of their home in 14% of foster cases and 34% of those in residential care despite a Government target to improve placement stability, the NAO said.
Seventy-nine residential homes were rated as inadequate by Ofsted in 2012/13, according to the report.
The proportion of children being looked after by local authorities in 2012/13 ranged from 0.2% in Richmond-upon-Thames to 1.7% in Blackpool. The national average was 0.6% of children.
Mr Timpson said: "This is a fundamentally flawed and misleading analysis of the Government's work to improve the lives of some of our most vulnerable children.
"I will always be the first to say that more needs to be done, but this report ignores the very real progress that has been made in transforming the life chances of children in care.
"It is a fact that since 2010, children in care are doing better at school and absences from school have decreased. Foster children can also now stay at home until the age of 21, and this year a record number of children found places in stable, loving homes through adoption."
Margaret Hodge, chairwoman of the Public Accounts Committee, said: "It is disappointing that the Department for Education cannot show that it has met its objectives to improve the quality of care and the stability of placements for children.
"It has no measures that tell it whether the system is working and improving and it has not set targets to improve the quality of foster care, even though 75% of children in care are fostered.
"As demand for care increases, and with real long term educational and employment costs of children not getting the right care, it's important the department gathers and shares data on what works in the best authorities.
"I expect the department to tell me how it plans to measure its effectiveness in achieving positive outcomes for children in care when it appears before my committee on December 8."
Sir Tony Hawkhead, chief executive of the charity Action for Children, said: "Today's figures confirm what Action for Children has feared, that something is going very wrong for our most vulnerable children.
"Those who have experienced the most traumatic early lives, the children who were neglected, beaten up and left for dead or dragged into criminality, are being failed by the state.
"Whether they need a safe home, mental health care or just a person they can consistently rely on to feel loved and valued, these young people are falling between the gaps in our complicated and over-stretched care system.
"It's clear to see that a huge amount of time, energy and money is being put into these children's lives, but we need a big rethink because children are still being failed.
"From our own experience, it is crucial that we really understand why a child has come into care in the first place and that we work with them as early as possible to give them love and the chance to heal. This is crucial in giving them back their childhoods and a brighter future."
David Simmonds, chairman of the Local Government Association's children and young people board, said: "Despite 40% cuts to council funding during the course of this Parliament, this report rightly recognises that many councils have so far managed to protect and, in some cases, increase spending on children's social care.
"However more than 650,000 referrals were made to children's social care teams last year, an increase of over 10%.
"The number of children requiring intensive support through a child protection plan has also increased by 65% since 2008. With demand for services rising at this unprecedented rate and funding continuing to fall, budgets cannot be protected indefinitely.
"It is not acceptable that children in care still lag behind peers in areas such as education and employment prospects, and councils are working hard to find new and innovative ways to close these gaps.
"There is no one-size-fits-all approach for children in care and social workers' decisions must always be based on the needs of individual children and not centrally driven targets.
"Councils are working with foster carers, residential children's homes and the Government to ensure the system is the best it can be for the children who depend upon it."
Cathy Ashley, chief executive of the charity Family Rights Group, said: "These findings are clearly very worrying.
"The continuing failure of public policy to assist the network of wider family and friends to support the needs of children who cannot live with their parents is one of the reasons there is so much pressure on the care system.
"It is high time this was given the priority it deserves."
The chief executive of children's charity 4Children, Anne Longfield OBE, said the report showed a radically new approach was needed.
"We need to be identifying problems earlier and addressing them before they lead to crisis," she said.
She has called for the establishment of one-stop shops which would bring together services for children and families, including health and social care.
"Hubs would mean professionals who support families would work much more closely together, enabling them to identify and respond to problems quickly," she said.
"This would help improve information sharing and multi-agency working - factors so often lacking when things go horribly wrong."
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