Wolverhampton has a chronic shortage of foster carers, with a minimum of 35 extra needed every year to cope with the high number of looked-after children in the city.
Now, council bosses have rubber-stamped a scheme to reward foster carers for the quality of care they provide, replacing the current system which sees pay determined by the number of years service offered.
Council bosses say they hope the scheme will address the 'unbalanced' provision of foster care in the city, which sees more than two thirds of children in care staying with foster families recruited by private agencies.
Currently, foster carers who have been registered for up to two years receive £170 per week, with the figure rising to £255 per week for nine or more years. On top of that they get a child allowance of between £137 and £236 depending on the age of the child.
The new scheme would see payments starting at £85 per week for one child with an additional children's allowance, rising up to £600 once a foster carer has reached 'specialist' status.
This involves completing all three levels of a diploma in childcare.
Councillor Val Gibson, cabinet member for children and young people, said: "The scheme is aimed at recruiting foster carers.
"We want to offer them better rewards and hopefully more will come on board. At the moment we have to use agencies for a significant number of children, which is more expensive and incurs an additional agency fee.
"The new package rewards our foster carers in relation to skills and expertise rather than for the length of time they have been with us. We also hope the scheme will help us to keep children in Wolverhampton rather than having to place them outside the city."
The scheme will also offer incentives to family and friend carers for the first time, while more money will be paid for carers who take on more than one child.
As part of the proposals foster carers will be asked to agree to take children aged from 0-18 years when registering. Currently carers have a bigger say over the age range of youngsters they accept.
The scheme was planned out over 18 months and was given the go ahead by Wolverhampton council bosses earlier this week.
The number of children in care in Wolverhampton has fallen from 780 to 715 in the last six months, but the city still has one of the highest proportions of looked after children in the country.