An investigation has been launched by the Victorian Government into claims a 14-year-old girl was sold for sex by a 15-year-old while both were in state care, it has been reported.

The shocking revelations come a day after reports that a 12-year-old in state care had fallen pregnant.

Sources have told the Herald Sun the prostitution claims were well known to some staff at the out-of-home residential centre in Victoria, but they failed to act.

The suspicions were eventually reported to Victoria's Department of Human Services, which launched a probe last year.

A spokesman for DHS was unable to provide the Herald Sun with answers to several questions yesterday.

Premier Ted Baillieu said a review of the Department of Human Services will investigate controversial cases over the past week, including the latest incident.

"If there are systemic problems they have to be addressed," he told ABC radio this morning.

It is understood Victoria Police has not been notified by authorities of the serious allegations, but would not comment.

Community Services Minister Mary Wooldridge also remained tight-lipped, instead issuing a statement through her spokesman, which said the Government could not comment on individual cases.

However, the statement assured Victorians it had acted appropriately.

"Whenever the Government or department receives allegations of harm in relation to a child in state care, they are investigated as a matter of priority," it stated.

The Herald Sun has learned Ms Wooldridge instigated an internal investigation after being alerted to both the prostitution claims and the 12-year-old's pregnancy in a letter sent by a member of the public early this month.

The letter provided detailed information on the 12-year-old girl's predicament, outlining the residential care facility she had been located at.

Premier Ted Baillieu yesterday said: "There has been a failure of the system . . . and the question now is was the response appropriate," he said.

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