Health authorities have been criticised for placing children as young as five years of age in State residential care for several years at a time instead of finding them more suitable foster placements.
The independent body responsible for inspecting social services said health authorities were not doing enough to find alternative placements for these children, resulting in them staying in residential care for much longer than necessary.
The findings are contained in a report by the Health Information and Quality Authority on the placement of children under 12 in residential care settings.
Latest figures show there are about 5,000 children in care. The majority are placed in foster care (84 per cent) followed by residential care (9 per cent). Of those in residential care, almost 100 children are under the age of 12.
The chief inspector of the Health Information and Quality Authority's social services inspectorate, Dr Marion Witton, said while this figure was small, the numbers in residential care were disproportionately large when compared with the best international practice.
She also said international research shows that children who stay in residential care for long periods are more likely to have poorer outcomes in later life compared with those who are placed with foster families.
Of the under-12s in residential care who were selected for review by social services inspectors, half had been in residential care for more than a year. A quarter were in residential care for more than three years.
Inspectors were told that many of these children had been placed in care for "stabilisation" on a short-term basis, following the breakdown of a previous care placement.
However, inspectors found that many of these children ended up in care for long periods of time due to a lack of active care planning or searching for alternatives by social workers or managers.
Inspectors found that significant numbers of children were "drifting" in their care placements, with no special reviews of their care plans to establish where the children would be best placed.
Dr Witton said this kind of uncertainty could have damaging effects on children in care.
"It is unacceptable that they should experience significant insecurity in their early childhood as a consequence of a lack of clarity about policy, resources that are inadequately developed and poorly managed, and care planning that is below standard," the report concludes.
Inspectors also found that care planning was more often determined by crisis management rather than long-term planing for what best met the needs of children.
Also, at a national level neither the Department of Health nor the Health Service Executive (HSE) had a written policy on the placement of children aged 12 and under with families rather than in residential care.
Among the recommendations set out by the Health Information and Quality Authority was that the HSE should urgently review the cases of all children aged 12 or under in residential care to ensure they are placed appropriately.
In response to the findings yesterday, the HSE said it had initiated a review of these cases and will, if necessary, strengthen care planning arrangements for their placement in alternatives to residential care.
Aidan Waterstone, the HSE's national specialist on children and family services, said there was a shortage of foster carers and a major campaign will be launched next year to try to recruit more.
Minister for Children Brendan Smith said his office would be guided by the principle that children should be supported within the family.
