The Ministry of Civil Affairs will formulate rules to encourage individuals and families to adopt orphans, as well as mulling regulations to make it easier for NGOs to set up children's homes on the mainland, state media reported.
The ministry's plan was announced amid public anger over dereliction of duty by authorities after a fire killed five boys and two girls, all aged four or five, at an unlicensed private orphanage in Henan's Lankao county last Friday.
"The Lankao fire has exposed leaks in our orphan assistance system. The ministry must learn the painful lesson," ministry spokesman Wang Laizhu told the People's Daily on Wednesday.
"We will enhance our orphan assistance capacity by making efforts to perfect our regulations on individual adoption and on orphanages run by non-governmental organisations."
The ministry says the mainland has some 615,000 orphans. It said government-funded child-welfare agencies had been set up in only a minority of counties, with only 109,000 orphans having been taken in by 400 such agencies across the country. More than 80 per cent of orphans were cared for by relatives, guardians or private orphanages.
Under the mainland's one-child policy, families that already have a child are banned from adopting an orphan. Many parents also abandon babies born with disabilities for another chance to have a healthy baby.
Professor Ai Xiaoming, a specialist in the welfare of children and women at Guangzhou's Sun Yat-sen University, said a lack of respect for life on the mainland and the absence of a comprehensive social-welfare system would hinder the reform of orphan care, especially when many orphans were abandoned because of their disabilities.
"Life has never been respected in our totalitarian society. We should realise that adoption is an act of respect for life," Ai said.
"In Western countries like the United States, local governments provide training courses for families who are planning to adopt disabled children."
Ai also highlighted the free medical support in the US for children with disabilities, calling it a key reason why American families adopted hundreds of disabled baby girls from China every year.
"What the US has done is not brag about their achievements, but show a common value - respect for life," she said.
"In our society, under the slogan of 'maintaining social stability', will our government dare take responsibility for social welfare and take care of the human rights of families or NGOs when they demand government support for disabled children?"
Professor Wang Ming, from Tsinghua University's NGO Research Centre, said encouraging non-governmental organisations to play a role in the care of orphans was the best approach to solving the problem.
"The ministry's figures show us that they couldn't get the job done over the past decades," he said, adding that officials focused more on bureaucratic procedures and advancement than on service delivery.