More than 162,000 children received a protection service in 2015-16, up from 135,139 children four years ago, Fairfax Media reports.

The number of children in out-of-home care has also surged by 17 per cent from 39,621 in 2012 to 46,500 in 2015-16, with the report finding grandparents are the most likely relatives to take on responsibility for children who cannot live with their parents.

The AIHW's child welfare spokesman David Braddock said the numbers had increased across all areas measured in the report, titled Child Protection Australia 2015-16.

He said high-profile inquiries such as the Royal Commission into Institutional Responses to Child Sexual Abuse may have led to a spike in reports to authorities.

"One of the theories is that increased awareness about child abuse is having an impact on the reporting," he said. "It's probably the most common question we get – why is the number of children receiving services increasing at such a rate?"

The report examined children who had been the subject of an investigation into their welfare, children in out-of-home care and children subject to legal orders for their care and protection. 

It found a high proportion of children were "repeat clients", with 73 per cent of children past recipients of protection services.

Indigenous children were seven times more likely to be involved with child protection than non-Indigenous children.

The number of allegations of child abuse reported to authorities increased by 30 per cent from 273,000 in 2012-13 to 356,000 in 2015-16. The report found almost half the notifications led to an investigation, resulting in 61,000 substantiated cases relating to 45,700 children.

The most common type of abuse in substantiated cases was emotional abuse, followed by neglect, physical harm and sexual abuse. Spending on child protection and out-of-home care services topped $4 billion in 2015-16, an increase of $283.7 million from 2014-15.

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