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The government has set targets for 50% of all 16 year olds to achieve GCSE or GNVQ passes by 2001.

However, just one in 10 councils hit that target last year.

The numbers of children leaving care without a qualification vary enormously across England.

More than 70% of children cared for in homes run by Bracknell Forest Borough Council, in Berkshire, achieved at least one GCSE or GNVQ pass.

However, according to the figures, just one in 10 children in care in Milton Keynes, Oldham, Greenwich and Kirklees obtain the same results.

But a spokesman for Milton Keynes rejected the figures.

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"We believe there was an error in the calculations. We believe the proper figure is more like 40% and not 4% as the report suggests.

"We believe that somewhere along the line a nought has been knocked out and we are looking into that," he said.

Officials have suggested that the low numbers achieving qualifications could be caused by a number of factors, including children leaving care before they sit exams.

'Fast progress'

Mr Hutton said fast progress was needed to improve the overall situation.

"It is pretty grim. We need to make faster progress in improving the educational achievements of children in care.

"There is going to have to be a very significant improvement in that area. We have a responsibility to make sure these children get the best possible care."

The report also shows that inspections of children's homes has greatly improved, following last year's damning report into child abuse in care homes in Wales.

Every council in England checked all care homes in its area last year.