Up to 3,000 vulnerable children are being failed by a care system that has seen abuse victims placed with sex attackers and a third of children moved 100 miles from home, inspectors say.
A report by Her Majesty's Inspectorate of Probation (HMIP) has found that children are "shipped" out of their home areas, leaving them to face "extremely poor" futures.
Basic checks are not being made by children's services when placing these "vulnerable and potentially dangerous" children into homes, HMIP warns.
Around a third of children in the study were placed more than 100 miles from home and nearly two thirds more than 50 miles away.
In one example, a 16-year-old boy was moved 31 times since being taken into care at the age of three - including one placement that lasted less than 24 hours.
In another, a 13-year-old girl, a victim of sexual exploitation, was found having sex with a 15-year-old boy in the children's home.
Sexual videos of her were later found on his mobile.
The findings come at a time of intense focus on the treatment of vulnerable children following the Jimmy Savile scandal and revelations about horrific sex abuse in North Wales children's homes like Bryn Estyn.
Chief inspector of probation Liz Calderbank said she is shocked by the "distressing" findings, saying that "shipping" children over 50 miles away makes offending "inevitable" in some cases.
"The system is failing in terms of how it is trying to look after them," she said.
The inspectorate, along with education watchdogs Ofsted and Estyn, looked at 60 children in six regions in a joint inspection into the work of youth offending teams (YOTs) with children placed away from home.
A fifth of the children had themselves been a victim of crime while under supervision of the YOT and just over half the children inspected had offended within the care environment.
In one area a host YOT was unaware a 13-year-old girl, who previously set fire to a children's home, was in its care until two weeks after she arrived. It then took three weeks to obtain assessments.
The HMIP report makes several recommendations, including for the Department for Education (DfE) to strengthen regulations and local agencies to work together more effectively.
A Department for Education spokesperson said three expert groups are developing proposals to improve the care provided by children's homes.
They said: "It is completely unacceptable that some local authorities and homes are letting down children by failing to act as a proper 'parent'.
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