Lisa Pascoe told delegates at the Association of Directors of Children's Services annual conference in Manchester that the inspectorate is receiving an increasing number of reports about unregulated homes operating.
"We're increasingly seeing and hearing about provision we think should be registered," Pascoe said. "It's always existed but it's growing - I'm quite worried about that."
She said that in some of these homes, one member of staff is looking after three children, many of whom are highly vulnerable teenagers.
"These homes are not regulated or have the oversight of that of children's homes and that doesn't seem right," added Pascoe.
- Inspections Clinic: Five tips for outstanding residential care
- Interview: Ann Coffey, chair of APPG for runaway and missing children
She added that some children are living in such settings for "two or three months" illustrating how council are using them for lengthy periods and not just short term placements in an emergency.
Research carried out by the all-party parliamentary group (APPG) for missing children and adults highlighted concerns from more than 25 police forces about the vulnerability of young people over 16 being placed in unregistered homes.
Pascoe said the inspectorate will alert all councils of unregistered providers that it finds are providing substandard services and urged children's services directors to alert them of homes they are concerned about.
"In some regions we are seeing providers repeatedly offer these services and refuse to register with us - I'm worried about these places," she said.
Meanwhile, Pascoe said there had also been a recent increase in the number of registered children's homes that have had their licence to operate suspended.
"We're quite conscious that over the last six to nine months we've seen quite an acceleration in our enforcement activity," she said.
"We've seen an increase in the number of homes suspended that are operating regionally.
"We need to do some analysis on that to understand if we could have spotted that earlier."