Distressed young people in care are often turned away by mental health services because they do not fit the criteria for treatment, MPs have heard.
This was despite it being known that three-fifths of children in care had some sort of mental health problem, the Commons education committee heard.
MPs were told more needed to be done to ensure these children's needs were understood and met.
The government is investing £1.4bn by 2020 on children's mental health.
Chief executive of Young Minds Sarah Brennan told the committee that many children were falling through the gaps in the system.
'Experience of trauma'
She said: "We have young people presenting to child adolescent and mental health services (CAMHS) who are then turned away because they do not fit the criteria of having a diagnosed mental health problem.
"And these are the young people who have the highest likelihood of having long-term mental health problems."
She said mental health staff and care professionals needed to understand the "common experience of trauma" that many children in care would have had.
Kevin Williams, of the Fostering Network, described how children moved from one placement to another would be having to find their feet in a new school and adapt to the new foster placement, on top of having to find new sources of mental health support in the new location.
And that could mean going to the bottom of a long waiting list, he said.
'Lack of stabililty'
That experience, in itself, could exacerbate any original trauma that the child had been through.
David Graham of the Care Leavers' Association said where there had been a lack of stability in a child's life, it could have a real effect on "who they are as a person and how they are with other people".
"All the engagement we have with CAMHS is about the level of need, and the needs need to be very high indeed for help. This misses out this whole swathe of issues about wellbeing," he said.
Dr Matt Woolgar, of the National Adoption and Fostering Service said, in written evidence to the committee, that mental health teams would often wait until the child's placement was stable before assessing or treating them.
"We have found some will defer seeing a case on the expectation that the child will likely soon move on," he said.
The committee also heard how schools were struggling to meet the mental health needs of their pupils, especially those in care.
Carol Jones, of the Association of School and College Leaders, said: "No one school can meet within its budget the resources needed to respond to the level of need that we are seeing in children in care.
"It's like asking schools to run their own ambulance services
"Most schools now find it is very difficult to get access into CAMHS because there simply aren't the resources."
Minister for Mental Health Alistair Burt said: "Young people's mental health is a priority for me.
"We are investing £1.4bn over this Parliament - that's one of the largest investments the sector has ever seen.
"We are getting every area of the country to plan how it will radically improve its youth mental health services and have launched the largest ever national campaign aimed at young people and their parents to reduce the stigma surrounding mental health."