Five homeless children have been found dead in a rubbish bin where they probably suffocated while sheltering from the cold, authorities in south-west China have said.

The boys, aged around 10, were found by an elderly rag picker on Friday morning, Beijing News reported. An initial investigation suggested they died of carbon monoxide poisoning, possibly due to burning charcoal inside the bin, which measured about 1.3 metres by 1.6 metres. Temperatures had dropped to 6C overnight and it is thought they had shut the lid to keep warm.

An official in Bijie, a city in mountainous Guizhou province, told the newspaper that police had not confirmed the cause of the deaths but had ruled out murder. The children's bodies remained unclaimed on Sunday; three have been identified.

Residents said the boys had been living in a nearby shelter they built from a tarpaulin, cement blocks and plywood, according to a man from the area who posted pictures of the bin online.

According to the ministry of civil affairs, there were an estimated one to one and a half million children living without parental care, mostly on the streets of towns and cities, in 2008. That did not include children working on the streets with migrant parents.

Last year the government ordered officials to place a higher priority on helping street children without parental care and to seek them out to provide help. It has also promised to build more centres providing shelter and basic services for them. In December the ministry of civil affairs launched a campaign to return most of them to their homes within the year.

Ma Li, who runs a shelter for homeless children in Jiangsu province, told China Daily that the deaths exposed the problem with existing provision for them. "Rescue centres don't have a long-term effective way to help these children as they can only provide food and shelter for a maximum of 10 days. After that, the rescue centres are required to send these children home," he said.

He said most children had run away because they had bad relationships with their parents and might have suffered domestic abuse – making them reluctant to go to the centres for help. Ma said a new system was needed to encourage NGOs, schools and individuals to participate in helping homeless children.

Dale Rutstein, chief of communications for Unicef in China, where the agency has been working with authorities to help street children, said: "There's been a strong effort to find children and bring them back to their home provinces. That's only a small part of the issue. The underlying causes really have to be addressed in a long-term, comprehensive way.

"The best approach to that is creating a child welfare system where parents can be assisted to care for their children better and case workers are aware of the needs of the most vulnerable families and prevent those more serious outcomes. [China] is in its very early stages of developing a more modern child welfare system."

Unicef has been helping to train officials dealing with street children and the managers of relief centres. It is currently working with the ministry of civil affairs on a five year pilot scheme to develop a community-based child welfare system.