Worcestershire County Council cabinet members have voted unanimously to develop a wholly owned council company to deliver children's services, which were rated as "inadequate" by Ofsted in January 2017.
In September last year the Department for Education told the council it had to find a new way of delivering children's services after a review questioned its ability to turn around the service.
In documents presented to cabinet members the council estimates that it will cost around £4.6m to establish and set up the new company, but this figure could rise further depending on location and IT costs. Property-related costs have been set at £1.33m but could rise to as much as £2m.
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