Welsh councils are breaking the law by failing to register units educating hundreds of children who have dropped out or been excluded from school.
Inspection agency Estyn has identified at least 81 facilities catering for 1,601 pupils not in school: only 30 were registered as pupil-referral units (PRUs) as of January 2003.
Estyn says virtually all the unregistered - and therefore uninspected - sites would meet the legal definition of a PRU, and has called on the Assembly government to enforce the law.
Some units are catering for particularly vulnerable children, including those with statements of special educational needs and pregnant schoolgirls.
In a survey of PRUs published last week, Estyn also says it is a "matter of concern" that many education authorities are failing to keep tabs on children who are not at school. And only eight are ensuring that excluded pupils get the 25 hours-a-week alternative education they have been entitled to since September 2002.
Brian Rowlands, secretary of the Secondary Heads' Association Cymru, said it was a grave concern that unregistered PRUs were in operation. "We have been campaigning for more PRUs, but ones that are properly organised, properly regulated and properly supervised, with qualified teachers."
He added: "It's long been our concern that, when youngsters have been sent out of the mainstream system, sadly many of them do get 'lost' and slip between the different supervisory bodies."
The Estyn survey emerged as headteachers and unions called for more places to be made available at PRUs, to help cope with rising numbers of disruptive pupils.
Heads say they are being forced to accept an increasing number of excluded pupils. Permanent expulsions have risen from 337 in 19992000 to 439 in 20023, and the Estyn report acknowledges that demand for PRU places always exceeds supply.
"Over the past five years, there has been more need for places but provision has more or less stayed the same. In Caerphilly we need three times the number of places we have got," said Chris Howard, head of Lewis Pengam school, Caerphilly.
Geraint Davies, secretary of the National Association of Schoolmasters Union of Women Teachers Cymru, said: "Across Wales the picture is a pretty gloomy one. Teachers have to cope with an increasing number of unruly individuals who increasingly spoil lessons for the other pupils."
But Estyn says teachers are not taking enough interest in the progress of pupils who transfer to PRUs, and have low expectations of them, while few heads or governors welcome proposals for a PRU on their site.
It is particularly concerned about "unsatisfactory" provision for children with statements of special educational needs, who make up around a fifth of pupils in registered PRUs (compared to 3.4 per cent in the general pupil population), and the lack of data about other children's SEN.
The specialist support listed in statements is unlikely to be available in PRUs, which offer a more restricted curriculum than mainstream or special schools. And in some education authorities, units have pupils on roll who would be in specialist medical care in other council areas, says Estyn.
Margaret McGowan, spokeswoman for the Advisory Centre for Education, which runs an advice line for parents, said: "PRUs are being treated like unofficial special schools without the resources. It is not appropriate for the children with the greatest needs to be placed in them for any length of time."
PRUs generally offer good care, guidance and support to pupils, especially in helping key stage 4 teenagers transfer to further education or work-based training, says Estyn.
But it says there are important shortcomings in the curriculum, with resources lacking for practical subjects like science and technology. And not all subjects are taught, leaving younger pupils at a disadvantage when compared to mainstream peers.
Some LEA officers told Estyn inspectors that their authority was "not able to prioritise funding" to provide both the the quantity and quality of education needed for children who were out of school.
Professor Ken Reid, deputy principal of Swansea Institute of Higher Education, is also concerned about the standard of teaching in PRUs.
"I went into one attached to a school and the pupils were being taught by teachers in their free periods," he said.
But he backed heads' calls for more provision for disaffected youngsters.
Cardiff has only one 15-place unit whereas Bristol, with the same number of secondary schools (20), has eight.