An inquiry by the All Party Parliamentary Group (APPG) for Runaway and Missing Children and Adults found that children are being inadvertently placed in “grave danger” .
It heard that thousands of children are being moved to children’s homes up to 100 miles from where they live, isolating them from friends, family and social workers.
The “sent away generation” can become magnets for paedophiles and county lines gangs, and that councils may inadvertently open new county lines by relocating children already groomed to sell heroin and crack cocaine.
Earlier this year, North Yorkshire Police and Crime Commissioner Julia Mulligan told The Yorkshire Post she was “extremely worried” about growing drug use in the county, as parents in Scarborough were targeted in a new operation to disrupt county lines drug dealing.
The National Crime Agency has warned that serious criminal gangs are behind a trend which had seen the number of children used as slaves more than double in a year.
Government figures show 64 per cent of children living in children’s homes in 2018 lived out of area, and MP Ann Coffey, who chairs the APPG, said: "It is a national scandal that local authorities are unwittingly becoming recruiting sergeants for county lines drugs gangs by sending so many children miles away. It must stop.
"Children are being systematically failed and placed in grave danger by the very professionals who are there to protect them.
"By placing so many children out of area, councils are complicit in adding to the trauma of already neglected and abused children.
"Our inquiry has shone a light into the shady twilight world of unregulated accommodation for children aged 16 and over, who become magnets for paedophiles and county lines drugs gangs. This accommodation must be regulated and inspected."
Mark Russell, chief executive of the Children's Society, added: "Our enquiry heard some truly shocking examples of the trauma and risk experienced by children placed out of area. It should be a wake-up call for urgent action at both the national and local level.
"These children are some of the most vulnerable in society, it is vital their needs are put at the centre of all decisions about their placement.
"No looked after child should be placed simply because that is where a bed is free, instead of that is where the child is most likely to receive the care, support and sense of belonging they deserve.
"We are calling on the Government to put in place an action plan and give councils more funding to ensure that there is a sufficient number of good quality, regulated and inspected care placements where children need them.
"Only then can we stop this epidemic of children being sent away, left feeling isolated and exposed to high risk."