In its latest annual report Ofsted says too many private foster carers are failing to register with councils and local support for foster carers is poor.
Private fostering arrangements in six out of 16 council areas inspected over 2007/8 were considered to be inadequate.
Robert Tapsfield, chief executive of the Fostering Network said: "The findings are not surprising and show the real need for councils to offer better incentives for private fosterers to come forward.
"At the moment there is very little comeback if they do not register and little on offer to them if they do."
Ofsted also highlighted failures of campaigns to encourage private fosterers to register.
Tapsfield said campaigning needs to target the wider children's workforce, particularly in health and social care.
"The children's sector is largely ignorant about private fostering and there needs to be better awareness so they can pass on the relevant information to those needing to register as private fosterers," he added.
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Private foster carers need more council support
Councils must improve the support and training they offer private foster carers, according to Ofsted.
