A report by the all-party parliamentary group for children - a cross-party group of MPs and peers - found that councils are increasingly focusing their limited resources on children who have already suffered abuse, neglect or are at high risk of harm, rather than attempting to intervene in cases at an early stage.
A survey of directors of children's services by the group found that 89 per cent find it "increasingly difficult to fulfil their duties to children in need". The report also asserts that children's social care is being undermined by staff shortages, high turnover, and a reliance on agency staff.
Meanwhile, the inquiry found "wildly different" approaches to early intervention, the way vulnerable children are identified, and rates of children taken into care, from one area to the next.
The group said the report, called No Good Options, comes as the number of child protection plans has risen by more than 29 per cent between 2010/11 and 2015/16, and, over the same period, a rise in the number of children being taken into care of 17 per cent.
However, despite the increases in demand, local authority spending power has decreased by more than 20 per cent in the same period.
Co-chair of the group, former children's minister Tim Loughton, said the variation in policy and practice found by the inquiry was harmful to children.
"Given we know that children in care are far less likely to gain good GCSEs and to go to university, and more likely to have poor physical and mental health, such a ‘postcode lottery' is deeply worrying," he said.
He called on ministers to "focus on realistic resourcing of all children's services, from prevention to early help for families, to care and child protection, and to look at ways to tackle the stark variation in standards across the country".
His call was backed by Anna Feuchtwang, chief executive of the National Children's Bureau, which acts as the secretariat for the group, who said children's social care was "in crisis".
"Some services cannot even fulfil their legal duty to support children in need," she said.
"This is happening right now and the evidence we have heard over the last year indicates that it could get even worse.
"Increasing demand set against dwindling resources is placing intolerable strain on the system, at a time when children's social care teams are having to deal with a host of new pressures and challenges, from refugee children to online grooming.
"It is time the government recognised that asking children's services to do more with less, ultimately results in misery for children and families."
The report makes a number of calls to government to tackle the issues it raised, including demanding the Department for Education commission an independent inquiry into variations in access to children's services in England.
The group also wants the government to review resourcing for children's social care services, and to work to incentivise investment in early intervention and prevention.
Dave Hill, president of the Association of Directors of Children's Services, said: "ADCS hopes that the findings of this inquiry, and its recommendations, are both heard and acted upon by the government.
"We would be particularly keen to see the importance of early intervention fully endorsed by the Department for Education. Such preventative measures have been a statutory duty for our colleagues in adult social care since the enactment of the Care Act in 2014.
"We would also be keen to discuss the proposed root-and-branch review of resourcing these life-saving services and the development of a national workforce strategy. This has been a missing component from the department's social work reform agenda to date."
Richard Watts, chair of the Local Government Association's children and young people board, said: "Councils have been warning government for some time that the pressures facing children's services are rapidly becoming unsustainable, with a combination of government funding cuts and huge increases in demand leaving many areas struggling to cope.
The number of inquiries into child protection concerns undertaken by councils has increased by 124 per cent over the past decade, and the number of children needing child protection plans has increased from 26,400 to more than 50,000 over the same period - an increase of more than 23,000 children needing social work support to stay safe from significant harm.
"Councils have worked hard to protect funding for child protection services in response to this rapidly rising demand, but ongoing cuts to local authority budgets are forcing many areas to make extremely difficult decisions about how to allocate increasingly scarce resources."
A Department for Education spokesman said: "We want every single child, no matter where they live, to receive the same high quality care and support - and this is exactly what our reforms are set up to deliver. We are clear that providing help as early as possible is the most effective way of keeping children safe, and our new What Works Centre for children's social care will ensure social workers across the country are able to learn from best practice.
"We have been taking tough action where councils are failing children, stepping in when they aren't doing well enough and linking them up with better performing local authorities or sector experts. We are also supporting the recruitment and training of social workers so they have the skills they need for this important job, investing over £800m in bursaries and in programmes such as Frontline and Step Up."
