A panel of experts and religious leaders will take evidence from every sector of society in an attempt to understand what is seen as an increasingly pressured and complex world for the nation's 12 million children.
The year-long inquiry will investigate why Britain's young people are said to be experiencing the worst ever levels of stress, crime, drug misuse and family breakdown. One new study claims that British children have the lowest quality of life of any in Western Europe - despite the UK's increasing wealth and prosperity.
Set up under the auspices of a charity, the Children's Society, the "Good Childhood" inquiry will also be guided by the Archbishop of Canterbury, Dr Rowan Williams, and include the Children's Commissioner for England, Sir Albert Aynsley-Green.
Professor Layard, emeritus professor of economics at the London School of Economics and author of the best-selling book Happiness, said the study would be a "scientific" investigation into the real extent of the problems and issues facing children in 21st-century Britain.
Parents and society in general are in danger of failing children in Britain, he believes. "Children are not consumer items that parents are free to consume likes houses or cars," he said. "They are sentient beings whom society has a duty to protect. Producing a child is therefore an act that carries immense responsibility."
A recent study in the Journal of Children's Services claimed that Britain was ranked 21st among the 25 members of the European Union for child well-being. This is by far the worst performance of all the Western European member states, and resulted in a ranking lower than Poland, Hungary and the Czech Republic. The only countries to finish lower than the UK were Latvia, Lithuania, Estonia and the Slovak Republic.
Dr Williams, who has agreed to act as patron to the inquiry and has two children of his own, aged 10 and 18, told The Independent on Sunday there needed to be an "urgent public discussion" concerning the state of modern childhood.
"We don't at the moment look much like a society that values children for what they are and wants to give them the opportunity to be themselves, not undeveloped adults," he said.
The new initiative - the first of its kind in Britain - will be unveiled tomorrow as the Secretar of State for Education, Alan Johnson, announces a new programme to increase "pupil power" in schools, such as setting up student councils at primary and secondary schools.
Children as young as seven should be given the chance to interview new teachers, design school uniforms, and even assess their teachers' performance in the classroom, under radical proposals being backed by Mr Johnson.
In one school in Newbury, Berkshire, on which the new empowerment scheme is based, students voted to fine teachers who drove to school when they could cycle or take the bus.
In a speech to the Youth Parliament tomorrow, Mr Johnson will claim these measures "lead to real results" by making pupils fully engaged with their life at school and in wider politics.
"So I say, 'Power to the pupils' - and not out of populism, but with a practical recognition of the fact that school councils show how elected representatives, accountable to their classmates, make difficult decisions through dialogue rather than conflict, for the greater good of the whole school," he will say.
An NOP poll of 975 children carried out by the Children's Society showed that nearly a quarter of the youngsters were scared of bullying, while more than one child in 10 said their parents' lack of "parenting skills, guidance and control" made their childhoods worse.
They also cited abuse and the risk of abuse, violence, a lack of friends and money, their schools and crime and hooliganism as other, lesser problems they encountered. In contrast, simple things such as having good friends, good parents and a loving family and "having fun" were the most important factors in a happy childhood.
The Good Childhood inquiry, due to report next year, is set to investigate a series of significant issues, such as increasing levels of mental health problems. With nearly 400,000 children on drugs such as Prozac and Ritalin, experts report that out of every class of 30 children, at least three are likely to have mental problems. It will also look at growing levels of divorce, under-age pregnancy and numbers of children living in one-parent families and consider the stigmatisation and alienation of young people, and the branding of "hoodies" and teenagers as criminals.
An opinion poll carried out last week for the IoS shows that a third of all young adults welcomed claims by David Cameron, the Tory leader, that hoodies needed "love and understanding" rather than persecution.
The inquiry will examine the notion that many teenagers and children feel ignored and marginalised by adults. "By blaming, targeting and pressurising children and young people, we are making childhood an increasingly difficult time," states the inquiry's remit, which pledges to "tackle the current climate of fear and confusion surrounding children by improving the way childhood is understood in the UK".
Dr Williams said: "I think commentators and social thinkers are waking up more and more to the levels of anxiety that are around in regard to childhood. It isn't just that there is worry about stable family backgrounds and the rising divorce rate. There is also a sense that the immense energy that rightly goes into protecting children doesn't seem to have produced any sense of children having the right kind of protected space to just be children."
Young people were under pressure from advertisers to be "small consumers", he said, with girls at greater risk of being "sexualised". There was an "obsession" with testing children, crushing "spirit" and innovation.
JACQUELINE WILSON CHILDREN'S AUTHOR AND CHILDREN'S LAUREATE
"This is a crucial investigation. One of the main difficulties today is that you can't give children the same freedom to go off for the whole day and play, as with previous generations."
JENNY AGUTTER ACTRESS WHO STARRED IN 'THE RAILWAY CHILDREN'
"The hardest thing about childhood today is being thrown into an adult environment from a young age because of advertising and television programmes."
DAVID DIMBLEBY BROADCASTER
"The terrible danger now is that people fear they are neglecting their children if they are not providing things for them. Of course, with TV and computer games there are dangers but it is also silly to forbid children from having contact with them."
ZAC GOLDSMITH EDITOR OF 'THE ECOLOGIST' AND ADVISER TO DAVID CAMERON
"Our society allows no room for children simply to be children. Children are just not designed to sit indoors, insulated from nature and the community around them."
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