Anglicare was negligent in its treatment of children at a residential care facility where sexual and physical abuse were rife, according to the Victorian Government.

The ABC reported last night that children in the care of the Department of Human Services were subjected to horrifying sexual and physical abuse by older children at Victorian residential care facilities.

The details emerged in a number of court cases where parents were trying to regain guardianship of their children from the department, which contracts out the running of residential care units to organisations such as Anglicare.

The court cases laid bare a failure by the department and Anglicare to protect the children. Carers and department staff failed to pass on information to police, psychologists and parents, and failed to properly supervise the children in the units.

When the worst of the abuse was revealed earlier this year, an urgent independent investigation was begun into the running of one particular unit.

The Minister for Community Services, Mary Wooldridge, told the ABC the investigation had found it was the right decision to take the children from their parents, but there was negligence on the part of Anglicare.

"It's clearly a horrendous situation, and it's always devastating and unacceptable when there's issues of sexual assault in relation to children in the care of the state," Ms Wooldridge said.

"My view is that there have been mistakes made along the way in terms of managing the care of these children.

"Particularly for Anglicare, there was negligence in relation to the staffing and the supervision that were provided in relation to the children."

However, Ms Wooldridge conceded that as the children's guardian, the Department of Human Services bore ultimate responsibility for the protection of the children.

"The department has a responsibility to ensure the care of children ... it is a combination of both the community sector organisation providing the care and the oversight of the department that is meant to ensure the safety and wellbeing of children."

Government report recommends changes to Anglicare's training

The report on events at the residential care unit contained 15 recommendations for Anglicare and 12 for the Department of Human Services.

The Anglicare recommendations relate to staffing, training, communication and reporting of critical incidents, while the recommendations for the department are broader and should be implemented statewide, according to the report.

Ms Wooldridge said Anglicare, which runs 16 residential care units in Victoria, has agreed to independent monitoring of the implementation of the report's recommendations.

"There are actions that are happening as a result of these incidents, not only so that the organisation assures me that that is the case, but also so that we have independent oversight to assure that as well," she said.

Ms Wooldridge said the Government had overhauled the reporting system in the residential care network at large, which she said had previously been haphazard and vague.

The Government has also indicated it will transform all residential care units into "therapeutic" units, with better-trained, higher-paid staff. However, the unit where the abuse took place was already a designated "therapeutic" unit.

"Despite the fact that additional funding was provided, the care didn't actually change," Ms Wooldridge admitted.

Anglicare Victoria chief executive Paul McDonald said the organisation was "devastated" by what took place at the unit at the centre of the claims and was implementing all the recommendations in the review.

However, he said the Department of Human Services was responsible for placing children of widely varying ages and different genders in the units.

"We need to look at the way children are placed in these units. At the moment, I think the way they're placed is simply reckless. As a provider we have no say in the right mix, which children get placed with which children, in any of our residential care units. I think any provider of residential care needs control over that," Mr McDonald said.

"I think we need to make single-sex units a mainstream factor of the system and not the exception. We need to control age range and gender mix."

Mr McDonald also called for a wider review of the entire residential care system.

Do you know more? Email investigations@abc.net.au