The Hawkers Lodge and Somerfield homes, which are primarily focused on short-term emergency placements, will shut down in the new year.
Staff will move to "more appropriate" child-centred care services based around families.
The council also wants to see earlier intervention for families in crisis and better access to child and adolescent mental health services.
Greater support for foster carers is also promised.
Chris Pattison, cabinet member for social services, said: "Our review did consider the alternative option of expanding the council residential accommodation but we believe family-based settings with dedicated foster carers will enhance the quality of life for our young people."
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