Staff and young people will be involved in a consultation on the future of a children's home earmarked for closure.
Staff at Maumbury House in Dorchester had been told their jobs were at risk because the county council was seeking to close and sell the property.
At a meeting on Wednesday the county's cabinet approved a consultation and insisted "all options remain open".
Councillors also agreed to recruit 20 social workers to help reduce the number of children in care.
Dorset County Council said cabinet members agreed to invest £1m to recruit experienced social workers to focus efforts on prevention and early help for families.
Children's services councillor Steve Butler said: "If we want to reduce the number of children going into care, we need to give our staff more time to work closely with families so they can really make a difference.
"The more social workers we have, the more manageable our caseloads will become, meaning there's more time to change children's lives for the better."
Maumbury House Community Home is Dorset's only home for children with emotional and behavioural difficulties.
The union Unison said some children were already living in guest houses following the closure of another home.
Unison branch secretary Amanda Brown said closing the unit would be an "ill-conceived idea" which would lead to children being sent out of the county, away from families and friends.
Mr Butler said the consultation - involving staff and young people as well as council departments and partner agencies, such as the NHS and police - would be followed by a report which would be presented to cabinet "setting out all the possibilities".
In July, Maumbury House - which provides long-term placements for up to five young people - was rated inadequate by an Ofsted inspection.
West End House children's home in Cattistock closed in October due to staff shortages after also being rated inadequate.