AbstractKinship care is the fastest growing form of out‐of‐home care placement in Australia. It is now a more common form of placement than foster care in some Australian states and is the most common form of placement for Indigenous children nationally. This paper reviews national data and reports findings from a state (New South Wales) study of the experience of kinship carers, children and workers. Relative carers, children and child welfare caseworkers were found to identify psychological benefits, family obligation and criticism of other forms of care as reasons for preferring kinship care. Legislation and policy, particularly the Aboriginal Child Placement Principle, are also identified as factors contributing to the rise in kinship care. Concern for the high levels of stress among carers and the low levels of monitoring of children's safety and well‐being are discussed and a stronger policy and practice response from government agencies is proposed. Indications of new policy and programme responses are demonstrated by several recent initiatives at state and national levels. Copyright © 2004 John Wiley & Sons, Ltd.