Britain's fostering system is failing thousands of children because of a massive shortage of foster parents.
A study by the Policy Exchange think-tank revealed the system is under huge strain because of a 16% rise in the number of youngsters needing placements since 2006.
In some cases, severely disadvantaged children are waiting for over a year for a foster placement, the report said.
It warned that research showed that many of the vulnerable children end up in jail and poorly educated.
Report co-author Matthew Oakley said only a third of youngsters in the system achieve basic levels in Maths and English, while more than a quarter of adults serving prison sentences previously spent time in care.
He added that the problems are costing society far more than the taxpayer's annual £1.2bn spend on fostering services.
"The lack of a stable, loving family affects a child's future chances in life," he said. "Our report shows that the outcomes of children in foster care are appalling and that foster carers are frustrated by poor support from social workers.
"Getting more and better quality carers into the system is essential. Improving the system now will pay huge dividends in the future."
Mr Oakley said more is needed to be done to encourage families to become carers.