Children as young as 12 are being diverted from foster care into youth refuges, putting their safety at risk and adding pressure to an overstretched crisis accommodation system, according to the country's peak youth homelessness organisation.
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Chief executive of Y Foundations Michael Coffey said the number of children aged 12-15 seeking crisis accommodation was increasing and refuge managers are concerned homelessness services are being used as an alternative to foster care.
He said refuge managers seeking a foster care place for homeless children were often given a "lukewarm response" from the Department of Family and Community Services.
"We have had a longstanding concern that these kids are under such risk of significant harm being homeless that they should be in the child protection system, rather than homelessness services," he said.
"Somehow the department does not automatically define these kids as being at risk of significant harm. I can't understand how a child out of home without care isn't at risk of significant harm."
Mr Coffey said 1300 children aged under 16 sought refuge accommodation in 2013 and the number of younger children seeking help was increasing.
"Services tell me they are getting more of these younger children coming to them and we need more resources to give them the 24/7 support they require," he said.
"These children have been through trauma. It's not as if they left home because they didn't get Coco Pops for breakfast. They need expert support and that support costs money."
Mr Coffey expressed concern that refuges were being used as a cheaper alternative to out of home care, with a general foster care placement funded at $37,000 per child. There are 18,000 children in out of home care in NSW with a chronic shortage of carers.
"There is the potential for a two-tiered system where you have the kids in out of home care, which is significantly better resourced than youth homelessness, and then you have this other group of kids in youth refuges," he said.
Shadow Family and Community Services minister Tania Mihailuk said it was dangerous to place children as young as 12 in refuges with older teenagers.
"This plan is simply a recipe for disaster – and ultimately at-risk children will suffer from this poor decision," she said
"Housing children aged 12 to 15 in homelessness shelters is a last resort option. The Liberal Government appears to be trying to set this last resort as a default."
A spokesman for the Department of Family and Community Services denied that youth refuges were being used an alternative to foster care.
He said the NSW government had committed $27 million over three years to the Homeless Youth Assistance Program, and refuges that accepted 12- to 15-year-olds were funded to provide 24/7 care.
