Ministers could bring in a commissioner to oversee children's services at Northamptonshire County Council after an Ofsted report found "serious concerns" about the department.
In a letter to chief executive Theresa Grant, inspectors said children referred to the county's social care service were "not consistently or effectively assessed, supported or protected".
"Against a backdrop of recent significant financial uncertainty and changes in leadership at corporate and managerial levels, services considered during this visit have significantly declined in the past two years since the single inspection in 2016."
In an effort to save money, the council has twice issued a "section 114" notice, which restricts its own spending to essential services.
There are fears that the council's budget shortfall could reach £70 million this year.
"It is clear from the findings from Ofsted that these failures in the system have taken place over the last two years and we are now completely focused on recovering from these failures."
Education Secretary Damian Hinds and the Secretary of State for Housing,Communities and Local Government James Brokenshire said the Government plans to send in a commissioner.
"Keeping vulnerable children safe is one of the most important duties local authorities carry out. Ofsted's report highlights serious concerns about the current performance of children's services in Northamptonshire and this cannot continue."