More than 50 Wakefield children are living in care miles away from the district.
The figure, which was published in a council report, comes as the local authority announced plans to create more accommodation for local youngsters who've been placed in its care.
A Cabinet meeting on Tuesday was told that while some youngsters were deliberately sent away from the area to protect them from sexual exploitation, others were living more than 20 miles from Wakefield because there was no space.
The situation has been described as a "false economy" for the council, with some social workers having to travel "all day" to pay a visit to a child.
The report said: "At present, the lack of local placements - both fostering and residential - is leading to too many children being placed at a distance from the district and away from their family and friend networks.
"(The council) currently has 57 children within the independent residential sector. Whilst four of these children and young people are in children's homes in relative proximity to the Wakefield district (within a 20 mile radius), the remainder live in placements at some distance."
The report added that it is "generally preferable" for youngsters to live in their local area unless there is a specific reason for them not to be there.
In a bid to tackle the problem, the Cabinet has approved plans to create two new children's homes at properties already owned by the council.
However, these will only have space to accommodate four children between them at any one time.
Presenting the report, children and young people portfolio holder Margaret Isherwood said: "While there are some children who need to be moved away from Wakefield so that they are not at risk of child sexual exploitation, there's an awful lot of a children out there who could be here.
"There's some social workers I speak to who are travelling all day to get these children. They need to be brought back into the district."
Welcoming the proposal, Coun Maureen Cummings said that the situation had been brought about by fundings cutbacks but now needed to be reversed.
She said: "For too long we've sent our children out of the district and it's a false economy.
"There need to be closer to home - it's a much better use of our social workers' time.
"Because of austerity we had to close children's homes, and we thought we could cope, but we couldn't.
"I hope this (scheme) is possibly one of many."
Converting the two buildings into children's homes will cost an estimated £110,000.