The Fostering Network has recommended that councils and fostering agencies do not place disabled children, those under five and those with heart disease or respiratory problems with carers who smoke.
In the long-term, it wants all fostering services “to move towards a position” where children are only placed in smoke-free homes.
Foster carers’ homes will be exempt from the smoking ban, which comes into force in England on 1 July.
However, in a document drawn up for councils and agencies, it warns they could face future legal action if children either develop a smoking-related disorder or claim to have taken up smoking after being influenced by carers.
The network’s deputy chief executive, Raina Sheridan, said: “We are not saying you can only approve people who don’t smoke. We are saying if you are going to place a two-year-old in a long-term fostering placement you have to look at the long-term health benefits of the child. Ten years ago nobody would have dreamed that we could introduce a smoking ban. It’s about changing culture and we are trying to influence what becomes acceptable.”