Sandy Bruce-Lockhart, chairman of the Local Government Association, expressed bemusement at the suggestion, which the Prime Minister was expected to make public in his speech on social exclusion yesterday, and called for a less interventionist approach from ministers.
The association wants decisions about partnership working between the sectors to be taken at a local level.
"Councils have taken a lead in including the voluntary and private sectors in service provision," said a spokesman for the LGA. "It should be down to a decision by local authorities because they know what the situation is on the ground."
Hugh Thornbery, director of children's services at NCH, which runs children's homes, said there were "real advantages" to the voluntary sector delivering more residential care. But he added that a child's future was dependent not only on the quality of residential care, but also on access to good education and mental health services, which are provided by local authorities.
The Prime Minister's speech, at the Joseph Rowntree Foundation in York, paves the way for an announcement by social exclusion minister Hilary Armstrong, who is due to publish the Government's Social Exclusion Action Plan next Monday.