Allegations children were sexually abused while residing with the welfare agency Anglicare show the Victorian child protection system is in crisis, the opposition says.
Premier Denis Napthine says Anglicare has failed in its duty of care to children under its guardianship and that the government is investigating.
Anglicare is at the centre of claims children taken from their parents by Victoria's Department of Human Services into residential care with the welfare body were sexually abused.
They were first raised in court cases in which parents sought to reclaim their children from DHS.
Opposition community services spokeswoman Jenny Mikakos said on Thursday she knew of other cases in which children were abused both by paedophile rings inside residential care and by other children in care.
"The sector is speaking regularly to me and they are reporting that this is a common occurrence," she said.
"That's absolutely tragic, that this is occurring not only with children preying on other children but also paedophile rings preying on children in residential care."
Dr Napthine said Anglicare had made mistakes.
"This is clearly a situation where they have failed in their duty of care," he said.
"Anglicare have apologised for that, and Anglicare together with the Department of Human Services have put in place significant changes to remedy this situation."
Dr Napthine said the government was investigating the case.
"Already, significant actions have been taken to protect those children, to relocate staff that were involved in the care of those children, to implement changes to ensure this sort of thing doesn't happen again," he said.
"The children's services commissioner, Bernie Geary, is now looking at this further."
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