Key proposals include giving young people a veto over any decisions about legally leaving care before they turn 18. It also proposes allowing care leavers to live with foster families up to the age of 21.

With regard to their education, it proposes a free entitlement to school transport in order to allow them to remain in the same school after they move to a new placement.

To ensure children are in the right placements, the Government will develop "a national tiered model of placement types underpinned by a national qualification framework for foster and residential carers".

Launching the plans this week, education secretary Alan Johnson said: "It is a genuine green paper. There's a lot of proposals rather than description."

Care Matters also says Ofsted will inspect all local authority provision for looked-after children over the next three years. These inspections will be in addition to joint area reviews.

Much of the document has been welcomed by the sector although some elements will cause unease, in particular whether to subcontract private agencies to take over the corporate parenting function from local authorities.

The green paper says these "social care practices" would be "commissioned by, but independent of, local authorities". But one senior figure in the children's sector dismissed the plan as "utter madness".

The green paper also makes little mention of unaccompanied asylum-seeking children other than to say "these children may be subject to a different placement regime".

But Paul Ennals, chief executive of the National Children's Bureau, said: "We welcome the focus on education and corporate parenting and the scope of the green paper."

- www.dfes.gov.uk.