Agencies contracted by the Department of Health and Human Services to provide early intervention services were "failing to provide effective services for vulnerable children and families", while the department did not even have a framework for assessing the effectiveness of the early intervention services provided to families.

A report released on Wednesday described a child protection system overwhelmed by cases, with the number of children reported to the Department of Health and Human Services increasing by 92 per cent in the past seven years, to more than 82,000 last financial year.

Auditor-General John Doyle found that DHHS's early-intervention system was characterised by "systemic deficiencies" and a lack of oversight, and said the department's capacity to respond to the emerging crisis was hampered by its failure to keep or analyse proper records from the agencies it relies on to deliver early-intervention services to children and families.

"The department does not know whether the services provided are effectively meeting the needs of vulnerable families," Mr Doyle found.

The shocking case of a five-year-old boy who died in his Melbourne home in 2012 after cutting his toe on an open can of cat food in a squalid house caused shockwaves, and led to calls for more scrutiny of early-intervention services for at-risk children and their families.

But Mr Doyle's review has found that DHHS has failed to monitor the services it contracts non-government agencies to provide, and that with the number and complexity of cases increasing, agencies are faced with overwhelming demand.

And children are falling between the cracks. As demand overwhelms service providers, there has been a 37 per cent increase since 2008 in the number of cases closed before they had been properly assessed.

There are 96 community-based child and family services registered and funded by the department to provide early-intervention services under the banner of Child and Family Information, Referral and Support Teams (Child FIRST) and Integrated Family Systems (IFS) in Victoria.

Despite the Auditor-General stressing that the department had no framework to assess the success of the services provided to families, and thus no way of knowing whether they were successful, the department secretary and government said more money would help the problem.

Responding to the report, department secretary Dr Pradeep Philip said the 2015-16 budget contained an extra $48.1 million over four years for Child FIRST and IFS, which would increase their capacity to respond to the needs of vulnerable children and their families.

Dr Philip said his department accepted the Auditor-General's findings, and had begun scoping a review of early intervention services, and planned for this to start in June.

Minister for Families and Children Jenny Mikakos welcomed the report, but blamed the former government.

"While the Liberals failed to provide the funding to ensure early-intervention services could meet rising demand, Labor's first budget gives them the boost they need."

VCOSS chief executive Emma Kelly said of the report: "It's pretty disturbing because it shows that the demand is so great that the services have to prioritise those who are at great risk, and whose who are medium risk are missing out."