Children's Minister Kelvin Davis has given a clear direction to Oranga Tamariki to change its ways, he says.
Davis appeared before a select committee for an annual review of the ministry on Wednesday morning.
Davis said he had told the ministry it needed to start devolving more power to the regions and to Māori, and ensuring children stayed with their whānau where possible.
He asked Oranga Tamariki to look at three areas: "relationships with whānau and Māori in the regions; and the professional social work practices as well as the organisational culture".
It follows the exit of Grainne Moss, who resigned as chief executive this year after repeated calls for her to go.
"This is a new way of working for Oranga Tamariki, they're being asked to entrust funding and decision making to people on the ground and to Māori," Davis said.
"I've directed Oranga Tamariki to develop a strategy responding to these calls for change."
He said a key focus was supplying Māori and the regions with the resources so they could decide what was best for them in their areas.
He expected to hear back from Oranga Tamariki and a ministerial advisory board on potential strategies in June, he said.