The study found that gaps in local services are resulting in thousands of youngsters being sent away to schools and social care when their needs might be better met in their local community. It also recommended better monitoring of the welfare and achievement of pupils who spend long periods in residential placements.
Organisations such as the Office for Standards in Education and the Audit Commission should also report on the effectiveness of local arrangements.
Commissioned by the Department for Education and Skills, and using data gathered by the SEN Regional Partnerships, the study indicated that the average annual cost of a residential placement in a non-maintained or independent special school was almost pound;72,000.
Overall, local education authorities made a total of 1,200 52-week placements at an average cost of pound;120,000. The average cost of a place in a children's home was about pound;2,050 a week, compared with about pound;271 for children living with foster carers.
The study recommended that local authorities audit their services and examine whether they could develop "multi-agency packages to enable more disabled children to remain at home".
Independent researcher, Anne Pinney, said that multi-agency approaches needed to be improved, and resources redeployed. "We don't really know who these children are who require residential provision, or why," she said.
"The question that the Government, local authorities, parents and welfare agencies need to ask is whether the needs of youngsters are being met, or would it be better for them to live closer to home and their families?"
The study found that about 13,300 disabled children in England live in long-term residential placements, in education, social care and health settings. Of these, 6,100 children with special needs board in maintained primary, secondary and special schools, and non-maintained special schools, and a further 3,400 are in the independent sector.
Just over 2,000 disabled youngsters are in residential provision made by social services, not including respite breaks and foster placement. These include 1,500 who are looked after under the Children Act 1989. A further 2,700 are children who have spent at least six months in hospitals.
There are significantly more boys than girls in residential provision.
Young males make up 80 per cent of those in live-in special schools, 70 per cent in residential placements made by social care and just over half who have spent more than six months in hospital.
Two-thirds of all those in residential special schools are of secondary school age and 90 per cent of disabled children in social care are aged 10 or older.
Children with behavioural, emotional and social difficulties are the biggest cohort of pupils in residential special schools, representing 35 per cent of placements. More children in residential social care placements have learning difficulties, but behavioural problems are the second most prevalent disability.
There are 11 times more admissions of children with mental disorders than any other diagnosis groups among those spending six months or more in hospital.
Francine Bates, chief executive of the disability charity Contact a Family, said that a survey of 2,000 families with disabled children carried out in 2004 for the organisation, found high levels of domestic problems.
More than 70 per cent of parents complained of exhaustion and sleep problems, and half had financial difficulties. A third admitted to problems in their relationships and nine per cent of parents said the pressures of having a disabled child had led to separation.
Ms Bates said: "There comes a crunch time as children get older and bigger when parents find it very hard to cope, and that is usually when they start to seek residential care for their children.
"However, if local services were better they may not have to send their children away from home at all. Some placements can be up to 300 miles away, which is simply too far for children to be separated from their families."
"Disabled children in residential placement" will be discussed at a seminar in London on December 6. For further information, contact Julie Haycock, disabled children's team, Department for Education and Skills, tel: 020 7273 1372, or email: email@example.comContact a Family, freephone: 0808 808 3555