Teenagers placed in an unregulated home in Birmingham have claimed residents were often short of food and sometimes not given bedding.
Councils paid up to £28,000 per month for a child in care to be accommodated by Rodor Housing and Support Limited.
Children as young as 15 lived in the house where they were given a small self-contained flat.
The firm denied 15-year-olds lived there and said it had a foodbank for children and flats were fully equipped.
It is not illegal for under-16s to live in unregistered homes, however such placements are discouraged by Ofsted.
A looked-after-child aged 16, who lived in the house, told BBC Newsnight she slept under a thin blanket and her coat for her first 10 nights there.
One or two support staff based in an office on the ground-floor minded the house which accommodated up to six children.
The girl, who cannot be named for safeguarding reasons, said she was expected to do her own food shopping and cooking yet had no cooking equipment and her only cutlery was an M&S picnic fork.
She said she was so hungry that she begged staff for food but was refused.
Two adults who visited the teenager said they were shocked to discover she had no duvet. They spent £200 on food and household essentials for the girl.
Supported accommodation is different to a children's home - not just because it is unregulated - in that staff are not usually expected to cook for the children, who are also meant to shop and budget for themselves.
They also do not take them to school, but should be available to help teenagers learn independence.
'Called boyfriend for help'
Newsnight estimates the child's council paid more than £15,000 per month for her accommodation and support.
Another former resident, Paige Brookes, said she moved into the house when she was 16, and was not given bedding on her first night.
"I had to call my boyfriend's dad who had to drive from Solihull to Birmingham at about 11 o'clock at night and we had to drive around trying to find somewhere open to get bedding, pots, pans, cleaning stuff."
Her council, Walsall, paid £2,000 per month for her to live in the house.
The claims have been investigated by Newsnight as part of its series Britain's Hidden Children's Homes about unregulated homes for looked after children.
There are now more than 5,000 looked-after-children living in "supported accommodation" - homes that provide support but not care and which do not have to be registered with, or inspected by, Ofsted.
This type of accommodation is deemed suitable for 16 and 17-year-olds capable of transitioning to independence.
However, Ms Brookes shared the home in Birmingham with at least two children under 16.
Newsnight recently revealed that on any given night, more than 100 under-16s are living in these unregulated homes.
Rodor Housing and Support said the company had a foodbank for children who failed to budget wisely and all the flats were fully equipped with cooking equipment and bedding.
Although the firm's owner, Marven Gabula, denied that children under 15 lived in the house, Newsnight has seen an incident report prepared by the company which clearly states that one of the children involved was under 15.
Newsnight also understands that another 15-year-old child was picked up from hospital and taken to the house by Mr Gabula when he moved in.
A few days later, Rodor sent an invoice to the child's council for £22,000 for the child's accommodation in the house for that month.
Since Rodor Housing and Support started trading in 2014, the company has received more than £7m to house looked-after-children, according to analysis done by the Open Contracting Partnership and the Spend Network for Newsnight.
The number of children in Ms Brookes's house at any one time varied, but Newsnight's research suggests that in a good month, Rodor could earn £74,000 in fees for just six children.
"Local authorities would not agree to pay something they don't agree to," Mr Gabula said.
"No-one is holding them at throat level. If local authorities want to look at varied options, they will look at varied options."
Newsnight has spoken to two former residents of Rodor Housing and Support properties who spoke highly of the company.
Nottingham City Council, which is one of Rodor's biggest customers, also said it had no concerns about the company.
Rodor Housing and Support operates about 20 supported accommodation properties in the West Midlands.
However, the home Ms Brookes lived in has since closed following planning enforcement action by Birmingham City Council.
The council said it had been converted to flats without planning permission and was not signed off as safe by a building control officer.