Research conducted for the What Works Centre for Children's Social Care found that while 60 per cent of local authorities saw an average rise in the rate of looked-after children between 2012 and 2017, four per cent had no change, and 36 per cent experienced a fall.
London saw the sharpest decrease in the rate of children in care over the five-year period, bucking the national trend. The sharpest increase was seen in the North East.
The report found that three common factors associated with councils that experienced a fall in rates - a decrease in poverty over time, participation in the Department for Education's Social Care Innovation Programme, and higher Ofsted ratings for children's services.
"Our interpretation is that both economic factors and service quality matter. The average change in the proportion of lowest income families in a local authority from the start of the recession was the factor most strongly associated with change in care rates," said Professor Jonathan Scourfield, deputy director of the Children's Social Care Research and Development Centre (Cascade), the research partner for the What Works Centre.
"So the socio-economic profile of the local population is certainly a very relevant factor.
"Ofsted ratings and involvement in the Innovation Programme, which reflect local social work practice, were also associated with decreases in care rates. Therefore, it is not a question of either economic factors, or service quality affecting child protection. Both are important.
"The economy certainly affects the societal problems that children's services respond to. It would be wrong to deny that. However, the quality of social work service provision is also important. But it is not the case that social care is completely powerless in the face of economic forces."
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Figures published by the Department for Education in September show that total spend by local authorities across England on children in care is predicted to increase to £4.16bn for 2018/19, a rise of £370.1m on the 2017/18 figure of £3.79bn.
The government has announced £84m will be provided to 20 councils with "high or rising" numbers of children in care to expand successful innovation programme projects over the next five years as part of efforts to reduce numbers of children being taken into care.
A recent report by chief social worker for children and families Isabelle Trowler called for more children deemed to be at risk of significant harm but not in immediate danger should remain with their families.
The What Works Centre is set to trial two pilot programmes aimed at reducing care levels - one to devolve budgets to social workers to decide what kind of support families should receive, and another to place social workers in schools.
The latest report by the centre is an "initial exploratory study" to help set the context for future studies by the centre looking at what works in reducing numbers of children in the care system.