Bradford Social Services opened Edgefield as part of a three-year strategy to enable it to support more children locally.
The home is one of five that will open over the next year. Two that do not comply with national care standards will close, leaving the city with an extra 24 places.
Dave Allen, manager of the new home, said: "A major part of our role will be to help children who are going back to live with their families and those young people aged 16 who are preparing to live independently."
Kath Tunstall, head of children's services in Bradford, said: "The main plan of our strategy is about prevention, enabling children wherever possible to live with their own families."
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