Zahawi made the accusation on BBC Two's Newsnight programme yesterday (Wednesday), in response to its investigation into the increasing use of unregulated settings for young people aged 16 and over.
The investigation found that numbers of young people being sent to unregulated care homes outside their home borough has doubled since 2014.
The minister claimed DCSs are failing to properly scrutinise placements to ensure they are suitable, as "the rules require them to do".
Zahawi said: "If directors of children's services are placing these young adults with them and would speak to them which is what the current regulations require them to do - which is to follow the rules that are already in place - then we wouldn't have children placed in these homes that are clearly not up to standard."
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