Councils have failed to ensure many of the most vulnerable children even attend school on a regular basis.
A report published today reveals big gaps in the treatment and attainment of children looked after by different authorities.
Two out of five authorities are praised for the way they closely monitor the progress of the children in their care and ensure they benefit fully from school. This compares to 69 of the 149 English councils in the report whose looked-after children's attendance and achievement at school remains poor.
Nationally, one in eight children in care was absent for at least 25 days each year, a figure which has remained unchanged for five years.
The joint report by Ofsted and the Commission for Social Care Inspection, supports The TES's Time to Care campaign in calling for urgent action to improve the education and care of children looked after by councils.
Maurice Smith, chief inspector of schools, backed the campaign and called for more to be done to prevent children going into care and to improve foster services for those who do.
The report highlights the need for longer-term stability with only half of children in foster care for four years staying with the same carer for at least two.
The chief inspector, who spent 13 years as a social worker between 1978-1991, first in Liverpool, then Wigan and St Helens, admitted it is a subject close to his heart.
He said: "Deep-rooted issues will require deep-rooted solutions. Good local authorities have better preventative services and social care assessments.
"It is an agreed truth that children do better in stable families. If they can't be in their own family, the next best thing is to be with another stable family. Too many are still in children's homes and these children are statistically less likely to achieve in education."
Anecdotal evidence suggests some foster carers are barely literate. Mr Smith said carers have to play a greater role in supporting children's education but cautioned against making unrealistic demands.
He said: "The recruitment and selection of foster carers has always been challenging. Over the years foster carers have become more professionalised but they are not falling off trees.
"A grasp of the educational demands on children is an important quality foster carers need to have, but there is another important quality they need, that is to love the children."