The idea is one of a number of draft proposals that civil servants from the Department for Education and Skills (DfES) have discussed with voluntary and statutory sector representatives, although ministers have not signed off the suggestions.
Some stakeholders have expressed concern that the housing idea could lead to "ghettos" of care leavers.
Other proposals include moves to reverse provision in the Children (Leaving Care) Act 2000 requiring options for leaving care to be discussed once teenagers reach 15 and a half. This is because raising the subject at this early stage could make young people feel unwanted.
The green paper is expected to cover responsive services, school support and preparation for transitions and moving on.
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