Children in private foster care are "invisible", says a fostering charity
Safeguards for children who are privately fostered are inconsistent in Wales, according to a new report.
The chief inspector of care and social services said guidance published in 2006 was not being fully implemented by the majority of councils.
A review found that while there has been progress to improve safeguards, more work is needed.
The Welsh Local Government Association has been asked to comment about the review's findings.
The report comes after the British Association for Adoption and Fostering (BAAF) warned on Monday that thousands of children in the UK may be being unlawfully fostered and could be at risk of abuse.
Under the law, the authorities have to be informed if a child is looked after by anyone other than a close relative.
BAAF said this was not happening and children in private foster care were "invisible".
Private fostering is when a child is looked after by adults who are not close relatives - defined as grandparents, aunts, uncles and siblings.
A conference to raise awareness of good practice in private fostering is being held in Llandrindod Wells, Powys, on Tuesday.
The Care and Social Services Inspectorate Wales (CSSIW) chief inspector Rob Pickford said: "Private foster carers provide care and support for some of the most vulnerable young people in society.
"There is some good practice across Wales in the way local authorities manage their responsibilities for private fostering.
"The report shows that more needs to be done to ensure that local authorities fulfil their private fostering responsibilities. In doing this, they need to build on the good practice we have identified."
The CSSIW review found evidence of some good and innovative practice, and of individual professionals working hard to safeguard and promote the welfare of children who are privately fostered.
But the inspectorate said this was not consistent and the majority of councils had more work to do before revised regulations and statutory guidance were fully implemented.
The CSSIW also found the number of children privately fostered in Wales remained low, and local authorities should do more to raise awareness about private fostering.