Former Labour health secretary Alan Milburn urged ministers to "come clean and make clear" that the Government will not meet its goal of eradicating it by 2020.
But he warned all political parties they had a duty to either "put up or shut up" over the target in the light of research by the Institute for Fiscal Studies showing it would take £19 billion to make it "in any way achievable".
In a speech to The Children's Society today Mr Milburn, who was appointed the independent reviewer on social mobility and child poverty by the Coalition, said: "Progress on child poverty is stalling.
"Worse than that, it has almost certainly started to reverse.
"Child poverty is set to rise and, if things go on as they are, it is likely to go on rising for many years to come.
"The child poverty targets that Labour first set and the Coalition have since backed will simply not be met.
"Child poverty strangles progress. It stunts potential. It stifles talent."
Mr Milburn, who left Parliament last year, said there were 1.4 million children living in absolute poverty but 2.6 million youngsters are living below the relative poverty line - set at 60% of median household incomes.
He called on ministers to "end the confusion in Government" caused by separately tackling child poverty, increasing social mobility and beating social injustice, warning there was a "danger here of too much resulting in too little".
He warned that while the public was "overwhelmingly sympathetic" to ending child poverty, tolerance for the poorest had "fallen dramatically".
But it was "inconceivable" that poverty or disadvantage could be overcome "without the State playing its part", he added.
That help must focus on education, housing, training and childcare.
He also urged Government to help create jobs and put in place the right incentives to get people off benefits and into work, adding the new Universal Credit, if implemented in the right way, "could be a major step forward in that regard".
But he added: "People have a responsibility to help themselves. At the simplest level it is parents who bring up children, not governments."
Mr Milburn urged ministers to end the "mealy-mouthed approach" to investing in early years services, comparing the amount the UK spends on childcare, around 0.5% of GDP, to the 2% spent in Sweden and Denmark.
And he called for an end to the "all-or-nothing approach to tackling poverty".
"If everything is a priority, then nothing is.
"The priority in my view for these next few years has to be children aged under five."
Mr Milburn, who will publish a report in spring next year, claimed the debate around tackling child poverty was consumed "in a fog of fantasy and fallacy, of confusion and complexity".
He said: "The fantasy is that the aim of eradicating child poverty by 2020, set by Labour and adopted by the Coalition, will somehow still be realised.
"The confusion is that the current approach to tackling poverty and speeding mobility is mired between policy agendas - of income distribution and opportunity creation - that have been made to sound like enemies when they are actually friends.
"Many can see what is happening - but no one seems prepared to reveal that the Emperor has no clothes. So long as that remains the case we will not have a firm foundation for making progress in what are inauspicious times for attempting to do so."
Justin Forsyth, CEO of Save the Children, said: "Save the Children backs Mr Milburn's stark warning this morning of the worsening situation of child poverty in the UK.
"The poorest are bearing the brunt of a stalling economy, and of cuts in child and other benefits.
"But instead of urging the Government to 'come clean' that its 2020 target to eradicate child poverty is unachievable, Mr Milburn should be insisting that more is done to meet this goal - something which all the main political parties agree on.
"We cannot write off the future prospects of a generation of poorest children, no matter how tough the economic downturn. We know there are ways in which they can be helped, including investing in affordable childcare, and helping the poorest families back to work. These must be an urgent priority for the Government."
Alison Garnham, chief executive of Child Poverty Action Group, said: "Alan Milburn is absolutely right that we should not be narrowing our child poverty strategy to just early years investment and must also tackle low income.
"We need a broader strategy than we have seen from government that covers childcare, job creation, skills, adequate benefits and housing.
"Now that the Government's analysis shows the poorest are paying the most for deficit reduction, we need them to urgently look again at making sure the burden is shared more fairly.
"Given where the economic crisis originated, hard-pressed families will have a hard time understanding why their security now seems to be such a low priority.
"The Prime Minister should restate his commitment to making British poverty history and adopt Alan Milburn's call for the Government's top priority to be preventing child poverty rising."
Anne Marie Carrie, Barnardo's chief executive, said: "The scandal of child poverty in this country will only be tackled with a strategy that focuses both on improving the income and the access to services that the poorest families have.
"Barnardo's knows that intervention early on is proven to improve the life chances of the most disadvantaged and vulnerable children and we welcome Alan Milburn's challenge to the Government to make early years services a priority.
"However, early intervention should apply to all children, not just the youngest - as poverty affects two in five 16 and 17-year-olds who are currently out of work and in desperate need of support."
Anne Longfield, chief executive of 4Children, said: "4Children agrees with Alan Milburn that long term investment in life chances and moves to boost family income should not be seen as mutually exclusive and we welcome his reminder to the Government that both these factors are vital to reducing child poverty and increasing social mobility in the long term.
"It is right and prudent to focus on achievable long term goals such as increasing life chances through early intervention, good early years provision and affordable child care, but these should buoy rather than dent our ambitions to reduce the levels of poverty experienced by millions of children every day.
"Spending on longer term outcomes should not be a smokescreen for forgetting that children are living in poverty today - if we allow this to happen we are looking at a lost generation of children whose life chances are simply going to be forgotten."
Shadow work and pensions secretary Liam Byrne said: "The IFS, the Office for Budget Responsibility, and now Alan Milburn, who was personally chosen by David Cameron to give impartial advice, have all confirmed that this Government is undoing a decade of progress on child poverty.
"Yet at the Autumn Statement, we saw the Government choose not to
enact a fair tax on bankers' bonuses but to squeeze working families further with a freeze on tax credits.
"The Government should listen to its own adviser. They need to act on child poverty fast, before they do irreparable damage to a generation."
The Prime Minister's official spokesman said the 2020 target was set out "in an Act of Parliament".
PA
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