The first school, for 150 children of both genders, met in a hayloft over a cowshed in Holborn with classes staffed by 23 volunteer teachers. As part of the Ragged Schools movement, Williams helped to found the Ragged Union the following year.
The work attracted the patronage and active support of the 7th Earl of Shaftesbury who, in 1866, used his influence to secure the use of a redundant naval warship, the Chichester. This was followed in 1874 by the Arethusa. These housed up to 400 boys on the Thames and were the start of over a hundred years of training boys for future life in the Royal or Merchant Navy. Between them, the refuges in the Soho/Covent Garden area and the two ships, housed boys and girls teaching the 
former the trades of carpentry, cobbling and tailoring in addition to seamanship skills; teaching the girls the skills necessary to fit them for domestic service.
In 1867 the farm school at Bisley opened, followed by the Shaftesbury boys school there in 1873.
By 1900 more than 1000 children were in the residential care of the charity. In 1904 the charity changed its name from The National Refuge for Homeless and Destitute Children to Shaftesbury Homes and Arethusa.
Over the next 40 years the refuges in London amalgamated and relocated out of London forming large institutional schools (Bisley Farm School, Fortescue House, Esher Place (for girls) in Surrey and Royston in Hertfordshire). After the second world war, the expansion of the fostering system gradually reduced the demand for places. The large institutions were sold, and the childcare provision was scaled down to a more domestic size. The change in the school leaving age in the early 1970s closed the gap between leaving school and the entry age for the adult armed services. The Arethusa training ship no longer had a role and was sold to the South Street Seaport Museum in New York. It is still there today, under its former name of Peking.
Children's homes owned and run by the charity came and went as demand dictated during the 1970s and 80s. In 1993 the first service level agreement for a partnership between a local authority and a charity was signed with Wandsworth borough in south London. In 1998 a similar contract was signed with Lambeth. In 2004, Shaftesbury Homes & Arethusa formed a new partnership with Southwark Council, taking on the management of three children's homes in the borough.
Supported housing and care leaver services have been run in Suffolk and London since 1990. A Young Persons Support Service was developed in Islington in 2003.
The land based facilities for the training ship based at Upnor on the Medway were developed into the Arethusa Venture Centre.
