The Commission for Social Care Inspection said only 49 per cent of children leaving care achieved at least one GCSE, well short of the target that had been set of 75 per cent.
Denise Platt, who is chairwoman of the commission, described the results as an area of "real concern".
Felicity Collier, chief executive of BAAF Adoption and Fostering, said stability of placements for looked-after children was a critical issue.
"Children are not going to be able to learn if they don't know where they are going to be living in the next six months," she said.
In 1999/2000, less than a third of looked-after children achieved at least one GCSE.
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