John, now 7, is one of 146 disabled people in fulltime care who disability advocates say are discriminated against by outdated laws.
Lobby group CCS Disability Action is demanding an amendment as part of sweeping child protection reforms led by Social Development Minister Paula Bennett.
Chief executive David Matthews said children with high needs were being abandoned and denied their right to a family life.
"What we know is that many of them will stay in long-term residential facilities ... and are likely to be out of sight for a long period of time if not the rest of their lives."
Non-disabled children younger than 7 who are placed in residential facilities must remain there no longer than six months. They are given an independent advocate to protect their rights and their case is regularly reviewed.
Severely disabled children, on the other hand, are given no advocate and can be returned to residential homes repeatedly. After a year in care a family conference must be held, but parents can request that their child's stay is extended.
The parents retained guardian status even if they were not actively involved in their child's life. "What it basically does is gives disabled children a different set of requirements than non-disabled children," Mr Matthews said. "Unfortunately these arrangements can go on and on and on and on."
The provision in the Children, Young Persons, and Their Families Act was originally designed to help parents who felt they could not cope with severely disabled kids. But CCS said it reflected an outdated medical belief that institutional care was the best out-of-home option for children with disabilities.
It said that residential care should only be a temporary measure and if there was no chance the child would return home they should be moved to another family.
Mr Matthews: "Currently there's a group of children who are made more vulnerable by the legislation. So we're saying that this is the appropriate time to repeal that section."
A select committee is considering the Vulnerable Children Bill, which would require all people who worked with young people to be screened and would introduce protection orders that prevented people from associating with children for up to 10 years.
Social services committee chairman Sam Lotu-Iiga said he was unable to comment on CCS' submission until MPs reported back on the bill.