Researchers from Harvard University and Boston Children's Hospital found that children in foster care have less grey and white matter, the two components of the central nervous system than those brought up in a typical home environment, the 'Daily Mail' reported.
Children in foster families have normal levels of white matter, which relays messages in the brain, but less of the grey matter which contains nerve cells and controls muscles, memory, emotions and speech.
Scientists believe the findings could explain why children who spend time in care are statistically more likely to develop issues such as attention deficit hyperactivity disorder and mental health problems.
People who have been in care also have, on average, lower intelligence quotient (IQ) and language skills than those who grew up in loving homes.
The differences in levels of grey and white matter is most likely to be due to varying levels of stimulation required for normal brain development, researchers said.
Many children in care have been exposed to deprivation and neglect, which could be linked to their lower levels of grey and white matter.
The improvement among those who were moved to foster families, however, indicates that it is possible to recover in terms of white matter, which affects learning ability.
The study team examined MRI scans from Romanian orphans aged between eight and 11, some of whom had been transferred to quality foster care homes.
The findings were reported in the journal Proceedings of the National Academy of Sciences.
"One of the most likely explanations for the wide range of developmental problems observed among children exposed to institutional rearing is that the deprived environment of an institution does not provide adequate experience on which to scaffold normal brain development," researchers said.
One of the study's authors, Dr Charles Nelson, a developmental neuroscientist in Boston, said the findings suggested that there was a sensitive period in the first two years of a child's life, when foster care has the greatest impact on their progress.
"The younger a child is when placed in foster care, the better," he added.