The Government has committed to early intervention schemes targeting 'troubled' families.
But the latest report from charity Action for Children warns that the financial squeeze in public spending is forcing children's services to focus on crisis intervention rather than root causes.
The "fundamental flaws in the funding of vital children’s services are creating a ticking time bomb for vulnerable children and UK taxpayers", according to the Red Book 2012 report.
"There are two things going on," explains Emma Scowcroft from Action for Children.
"The system by which we fund children’s’ services is based on short-termism, short-term decision-making and short-term funding.
"And that is handed down from government to local authorities, to service providers and to families, who find chop and change in their service delivery, not necessarily the same person there to support them.
"For example, one young person we spoke to for the report is Stacey.
"She has been supported for over a year because her child was on the at-risk register.
"Then social services decided that the child could be off the register. Stacey had done incredibly well, she had turned her life around, and then all of the support was taken away. You went from a massive focus of support to nothing.
"And we know that people need a level of consistent support. I do not say for ever, but she had a huge amount of support for over a year, and then it just disappears.
"And we know that, that individual feels very lost now, and she is trying very, very hard to maintain the progress that she has made.
"That is the problem with the system. And at the very same time with less spending on supporting services and the economy, there are people losing jobs, leading to money stress. People's needs are generally increasing. More people need the support that the state offers."
The Red Book 2012 investigated the real impact of the recession and spending decisions on over 46,000 children supported by the charity in 150 communities across the UK.
It found that two out of three of the most vulnerable families are struggling with more severe issues than a year ago.
Action for Children said that just 12% of the planned public spending cuts had come into effect by April 2012, and with dramatic welfare reforms still to be implemented, the situation is only going to get worse.
"It is a time bomb," explains Ms Scowcroft.
"The system has never been perfect.
”We see the inter-generational crisis of deprivation, where it is persisting through decades in families passing down from grandmother to mother to child.
"That needs to be addressed early enough."
She says that the financial crisis means there will be more people with greater needs, "and then we really won’t be able to focus on any early intervention".
The Red Book 2012 bears out these concerns.
51% of surveyed staff reported increasing demand, yet service capacity to make a lasting difference to children and families’ lives are being further compromised by short-term funding, with 91% operating on contracts that will not outlast the current Spending Review, which extends until May 2015.
Action for Children says the "quick-fix funding" is exacerbating existing need and instability, creating a false economy that could cost society more than £1.3 billion a year.
"We want cross-party consensus," explains Ms Scowcroft.
"There are two things we believe can help local authorities deliver the early intervention that the Government and opposition have signed up to.
"We want local authorities to feel the security of the funding streams.
"Not necessarily more funding, but the stability of the funding. Knowing when the money is coming and how much it will be. That means that they can plan.
"The local authorities can commission services over a long period of time so that the service providers will feel secure, that they can go on and develop those real and important relationships with families.
"And more important is that the families know that we are going to stick with them while they have a problem or a need that we have identified, and that they are not going to be left alone. We want to be there as long as it takes to help transform people’s lives.
"And one of things that we say is ‘put children first and the politics second.'"
As well as secure long-term funding, Action for Children wants a new a statutory duty upon local authorities to provide sufficient early intervention services in their local area.
"We are an organisation who for a very long time has spoken about an early intervention,” explains Ms Scowcroft.
"We believe it is obvious that we should intervene at the point when you know that there is a problem.
"For a very long time local authorities have been unable to intervene at an early point, simply because they are supporting people who are in crisis. It is very, very difficult to switch to intervene early when you are dealing people who need lots of support.
"The system is fundamentally flawed and has been for a long time."