The Royal Wanstead Children's Foundation, which supports children in need at boarding schools, said boarding schools offered good value for money and high standards of care.
Colin Morrison, the foundation's chairman, said fees for state boarding schools started at 12,000 a year whereas keeping a child in a children's home could cost some 100,000.
Boarding schools offered vulnerable children the opportunity to "break the cycle of deprivation", he said.
The Government should provide tax incentives to enable boarding schools to expand and provide additional places for vulnerable children, he added.
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