More than 8,000 young people leave care each year and a disproportionate number end up homeless, it said.
The report, by the National Care Advisory Service (NCAS), part of charity Catch 22, acknowledges the government's Care Matters reforms have had a positive impact, but argues that more needs to be done.
It offers guidance for local authorities on how to provide the "intensive support" necessary to help care leavers find a place to live, furnish it, pay bills and gain employment.
John Hill, national manager of NCAS, said: "Finding a home for a young person leaving care is just one step towards independence, but it's not enough to have a roof over your head if you cannot adequately furnish your property, are racking up debts, can't get a job and are isolated from the rest of the community."
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