Latest data from the Department for Education reveals the number of children accommodated in secure children's homes in England and Wales fell from 204 in March 2018 to 172 in March 2019, an annual reduction of 16 per cent.
Children are placed in secure homes by local authorities on welfare grounds and by the youth custody service due to offending behaviour.
The data shows the percentage of children and young people detained or sentenced and placed by the youth custody service decreased from 48 to 38 per cent of the total over the past year.
Meanwhile, the percentage of children placed by local authorities increased from 47 to 56 per cent over the same period.
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The fall in the number of secure children's home placements saw occupancy levels drop to 66 per cent of approved places in March from 80 per cent in the previous two years.
Despite this, the number of approved places in England and Wales rose slightly from 255 in 2018 to 259 this year.
There are 15 secure children's homes in England and Wales. In 2016, responsibility for commissioning local authority places across England was handed to Hampshire County Council.
The latest data continues the long-term trend in the decline in secure children's home use - in 2010, 258 children were accommodated in secure homes.
Over the same period, the number of approved places contracted to the Ministry of Justice has also declined from 191 to 106.
The Ministry of Justice (MoJ) said the decline in secure children's home placements was linked to the fall in the number of children being detained.
"This has been influenced by a move by courts towards sentencing children [to custody] being a last resort," a spokesperson for the MoJ said.
Of the 172 children accommodated in 2018/19, 61 per cent were boys and 39 per cent girls.
The DfE report states a drop in the proportion of boys living in secure children's homes from 67 to 61 per cent over the past 12 months, can be explained by a 23 per cent decrease in the number of boys accommodated.
By contrast, the number of girls placed remained the same as last year.