The Royal Commission into Institutional Responses to Child Sexual Abuse will hold a public hearing into out-of-home care systems around Australia in March.

Announcing the hearing on Friday, the commission said it would examine allegations of child sexual abuse in foster care, prevention of abuse and the recruitment, assessment and training of carers.

It will also look at how well children living in foster care are monitored by independent authorities.

Jacqui Reed, chief executive of the Create Foundation, which advocates for children in care, said the hearing was well overdue.

"We know that abuse is still happening in out-of-home care," she said.

"We hope that this public hearing will not just focus on historic examples of abuse but it will examine some of the current structures which are failing children in care.

"We want to ensure that the system is fixed so abuse cannot continue in the future. It is a hornet's nest but we welcome it with open arms."

The Create Foundation supports greater oversight of the foster care system, including more checks on children in care and an easily accessible independent complaints system.

"This hearing will challenge many of the assumptions people make about out-of-home care," she said.

"Yes, children need to be safe if they can't live at home but often the out-of-home care system doesn't offer them anything better and in some cases it leaves them worse off."

Executive officer of the Care Leavers Australia Network Leonie Sheedy agreed that foster care system needed greater public scrutiny.

"There are a lot of people who have made a lot of money by taking on foster kids," she said. "Some of them have committed crimes against those children and they have never been held accountable."

Louise Voigt, chief executive of Barnardos Australia, said she hoped the hearing would eventually lead to improvements in the system.

"Some of the most egregious and terrifying things have occurred in out-of-home care and really very little has been done about it," she said.

"I hope that this hearing does not just look at remedying the past but also looks at what we can do in the future."

A spokesman for Family and Community Services said the organisation welcomed the opportunity to take part in the public hearing.

More than 40,000 Australian children are in out-of-home care, 18,000 of them in NSW.

A NSW Auditor-General's report released last year found that only half the children in the care of Family and Community Services received an annual review.

The public hearing will begin in Sydney on March 10.