Thousands of teenagers in care are being "dumped" in unregulated homes and "abandoned to organised crime gangs", the BBC has been told.
The number of looked-after children aged 16 and over living in unregistered accommodation in England has increased 70% in a decade, Newsnight has found.
Police forces have raised concerns, saying criminals see the premises as an easy target for recruitment.
The government said children in care "deserve good quality accommodation".
The Association of Directors of Children's Services (ADCS) said local authorities do "many things" - including unannounced checks and DBS checks - to monitor provision.
As part of a special series of reports, Britain's Hidden Children's Homes, Newsnight has learned that - according to figures from the Department for Education - around 5,000 looked after children in England are living in so-called 16+ supported or semi-supported accommodation - up from 2,900 10 years ago.
This type of accommodation is not inspected or registered by Ofsted, even though residents are in the care of the state.
But because they are deemed to be receiving support, rather than care, the accommodation is not subject to the same checks and inspections as registered children's homes.
Local authorities can pay to place children in unregistered accommodation if they deem it is in a child's best interests. This can often be simply a house on a residential street, with staff on site or visiting for as little as a few hours a week.
'Desperate and alone'
Amy - now 19 - was moved to one of these homes in Bedfordshire, when she was 16 years old.
"There was a mattress but no bed sheets, it was freezing cold and I had to use my coat and blanket as a duvet. It made me feel sort of desperate and very alone."
Amy - not her real name - said there were times she was frightened living in the home.
"I was hit in the face by one of the staff members," she said.
Jackie Sebire, assistant chief constable at Bedfordshire Police and the National Police Chiefs' Council lead on serious violence, said that more than half of the 60 homes for looked-after children in Bedfordshire are unregulated.
"They are the ones that we have the majority of the children going missing from because the care is so inconsistent," she said.
Amy was among these missing children, taking the train to "meet random men in London, as anywhere is better than this".
"We'd just get random men off the internet and then sometimes they would come and pick us up at the home and they'd take us places. A lot of them were just strange men who just wanted younger girls and they were very, very dangerous," she said.
"They wanted sex and they wanted drugs and because they would buy you alcohol they would think you owed them something."
Amy says she was not sexually assaulted.
The home Amy lived in told Newsnight it investigates complaints thoroughly and operates with high standards. It said it would support the 16+ sector being regulated.
A Bedford Borough Council spokesperson said: "We are aware of the concerns raised which were fully investigated at the time.
"Semi-independent living accommodation for young people over 16 is not regulated by an inspection regime and this is an issue across the country. Many local authorities share our concerns and this has been discussed in parliament."
The All-Party Parliamentary Group for Missing Children and Adults has been looking into the issue, and wrote to 43 police forces in England and Wales.
Thirty-four responded, with at least three-quarters expressing concern.
Newsnight has been given exclusive access to this research, which the group's chairwoman, Ann Coffey, described as painting an overall picture "of dumping children in a twilight world and leaving them to fend for themselves and take their chances".
Cambridgeshire Police said premises are often "well known to local criminals" and seen as "an easy target location for recruitment of new children".
This was echoed by Hertfordshire Police. The force said it had seen examples where young adults had been targeted and "girls have been groomed and trafficked to other areas".
Ms Coffey said "we should be very concerned" about this growing sector.
"It is absolutely essential that that market is regulated in a way that meets the needs of children," she said. "If you don't have regulation then what will happen is it will meet the needs of the providers - the people who are basically making a profit out of this kind of accommodation."
"I wouldn't place my 16 or 17-year-old in this accommodation," she added.
'Care so inconsistent'
"Why should we be placing other 16 and 17-year-olds in this twilight world where, at a very vulnerable age where they need the greatest level of support, we are abandoning them to paedophiles and organised crime gangs?"
Andrew Neilson, from the Howard League for Penal Reform, said: "Exposing children to greater risks of criminalisation and exploitation isn't just wrong: it makes a mockery of joined-up government."
The Department for Education "should be reviewing the situation urgently", he added.
Jackie Sebire and the NPCC also want action from government.
"If you think about all the places we regulate the fact that we don't regulate those 16+ settings - it's just wrong and it really needs to change now… because the care is so inconsistent," she said.
"Ofsted could have a duty to regulate if the legislation and their remit changed and that is one solution we have proposed."
But ADCS said it would not advocate for total regulation, as it "would limit flexibility".
They added: "We are keen to see providers of accommodation take their responsibilities to provide suitable accommodation seriously and to have open and transparent ways in which this can be assured."
Children and families minister Nadhim Zahawi said: "Semi-independent living can act as a stepping-stone for young people about to come out of care...
"Local authorities are required to make sure that children in care and care leavers are given suitable accommodation to meet their needs, including that they are safe and secure which is why I recently wrote to all Directors of Children's Services to remind them of this obligation."