The Looked After Inside project, which was carried out by the National Children's Bureau, followed 12 looked-after children in prison. Of these, four were back inside prison three months after release, and none of the children were involved in education or employment.
The news comes a week after Mr Justice Munby highlighted serious failings in the way Caerphilly County Borough Council handled the case of a boy who was subject to a full care order but was also locked up (Children Now, 13-19 April).
Di Hart, principal officer of the Residential Care Unit, based at the NCB, said the Department for Education and Skills, which also funded the research, was now "committed to accepting some of the recommendations".
She declined to go into the detail of the recommendations but said the "overarching message" was that the Government should "find a way that social services remain involved in these children's lives".
Meanwhile, Caerphilly council, responding to last week's ruling, said it recognised the need for "improved processes".
- See Analysis p12.