A NSW Auditor-General's report into the department revealed a 20 per cent increase in the number of children reported to be at risk of serious harm but the number of caseworkers has improved only marginally.

The caseworker-to-child ratio improved from 1:25 in 2012-13 to 1:21 in 2013-14 but still falls below the 1:12 ratio recommended by the NSW Ombudsman.

Caseworker vacancy rates fell to an average of 5 per cent of funded full-time equivalent positions in June 2014, down from 13 per cent in June 2013.

NSW Auditor-General Grant Hehir recommended the department increase its effort to fill the gap between the actual number of  caseworkers and the number of funded positions.

He also gave Community Services a deadline of June 2015 to appropriately monitor the welfare of foster children in its care.

Only half the children in the direct care of Community Services received an annual placement review, as required under the Children and Young Persons (Care and Protection) Act.

"At 5 July, 2014, FaCS has not conducted 952 or 46 per cent of the required annual placement reviews for children or young people under its direct care," Mr Hehir said.

Placement reviews cover a foster child's health, well-being, education and social life and are conducted to ensure the placement is meeting the child's requirements.

The report also found Community Services failed to meet its target of reducing the number of children in statutory out-of-home care.

A goal to reduce the rate of children reported to be at risk of significant harm was also missed with the report showing the number of reports increased by 20.2 per cent from 104,817 in 2012-13 to 125,994 in 2013-14.

Government statistics show that only about a third of children who are reported at risk of significant harm receive a face-to-face assessment.

Greens Community Services spokeswoman Jan Barham called for improved early intervention services for vulnerable families.

"The Auditor-General's figures call into question whether the government is providing adequate services and funding to meet its child protection obligations in NSW," she said.

"The caseworker vacancy rate might be falling but the performance figures call into question whether even a fully staffed Community Services would be able to deal with the child protection caseload in this state."

Community Services minister Gabrielle Upton said the increase in caseworker numbers was a "significant achievement" and an extra $500 million would be invested in child protection during the next four years.

She said reforms to the foster-care system were under way with the aim of improving the circumstances of children and carers.

Professor Ilan Katz, of the Social Policy Research Centre at UNSW, said the proportion of children at risk receiving face-to-face assessments was still unacceptably low.

"The effort should be going into reducing the number of children who are reported in the first place," he said.