Children in state care are "too often" being shifted around as many as sixty different homes, the Children's Commissioner says.
Figures released to Newshub under the Official Information Act show more than a thousand approved caregivers are not being used.
The revelation comes as the number of children in state care skyrockets to a record level of 6250.
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While the caregivers might be available, they do not meet the specific needs of children needing to be rehomed, Oranga Tamariki says.
Judge Andrew Becroft believes it could lead to difficulties trying to place children in the most appropriate homes, which he says will stop a "never-ending cycle".
He told Newshub it's crucial the Ministry makes the right decisions.
"I met a young person a while ago who had already had 62 placements," he said.
"This is unacceptable and it's the danger, I think, of the headlong rush into foster care."
The Ministry's general manager of caregiver recruitment and support, Janet Smart, says it is "working really hard" to get placements right.
"Every child is an individual and it's really important we get the best care option for them as soon as possible."
Oranga Tamariki says it has set up a database that provides a "real-time" view of available caregivers.
Ms Smart told Newshub there are both family and non-family caregivers ready to take on a child.
Only about 200 are prepared to take a non-family member at short notice, while another portion want a baby to live with them for life, she says.
Chief executive of support agency Fostering Kids NZ Linda Surtees agrees the placement process is vital. She warns children can be further traumatised if they are put with the wrong family.
Ms Surtees believes the Ministry has made good progress, but says there are still "ways to go" in supporting caregivers.
"They [caregivers] need to be prepared enough so they can focus on the needs of the child," she said.
"Children in care need to come first because they are starting so far back."
Oranga Tamariki says it has recently set up a 24/7 support line for caregivers, as well as upgrading essential training.
The Children's Commissioner is confident the Ministry has made good progress, but admits there is still "significant work to be done".
Children’s Minister Tracey Martin declined to comment.