"We believed the decision to place this little girl with her 'aunty' was in her best interests at the time with the support of her mother and the person we believed to be her father.
"Since this decision was made, it has been confirmed that he was not her father and that she was not related to the person caring for her."
Ms Anderson said CYF recognised that the process took too long and it could have been more responsive and ensured it worked more closely with the maternal family.
"I personally met with the current caregiver to hear her concerns and have acknowledged where we could have done better," Ms Anderson said.
"The family have had a difficult journey and I know it has been very frustrating for them."
The child's foster mother said the girl was returned to Wanganui this week after a drawn-out battle in the Family Court. When she arrived she was covered head to toe with weeping eczema and had scabies.
The foster mother said that when the child's mother, whom she described as unpredictable and unreliable, became pregnant she agreed the baby should live with her and her husband - foster parents to dozens of children over 20 years.
But while pregnant the woman went to Christchurch, met Hetaraka and moved in with him. She fell for Hetaraka and told him the baby was his, the foster mother said
There was a family group conference in 2009 to discuss the coming baby and CYF awarded custody to Hetaraka and his sister on the say so of the mother.
"She just wanted to try and keep him [Hetaraka]. It was unbelievable ... they weren't related to the baby yet they were awarded custody on the say so of someone who wasn't thinking straight," the foster mother said.
At the conference, CYF asked Hetaraka to have a paternity test but the baby was 15 months old before the test showed he was not the father.
"I can't believe how this turned into such a struggle ... no one wanted to listen to us - it was a massive fight all the way," the foster mother said.
Wanganui lawyer Hamish McDouall, who acted for the foster parents, said that in his opinion CYF had taken the line of least resistance.
"To my mind there was a real lack of gumption in this case by CYF. Placing vulnerable children is more than following the bureaucratic line, ticking boxes. It's all about stability for the child."
- APN