A third of children who took part in a major study are doing less than 30 minutes of physical activity a day.
The research by Sport England found around three million children (43.3%) lead active lives, doing an average of 60 or more minutes of physical activity a day.
However, just over 2.3 million children and young people (32.9%) are less active, which means they do less than 30 minutes of physical activity a day.
Among active children, only the most active 1.2 million (17.5% of the total) are meeting the Chief Medical Officer's guideline of at least 60 minutes of activity a day, every day of the week.
A further 1.7 million (23.9%) are fairly active, doing 30-59 minutes of physical activity a day.
The findings have led Sport England chief executive Tim Hollingsworth to call for more focus on the health and wellbeing of young people along with a system-wide change.
"Parents, schools, the sport and leisure industry and government all have a role to play in addressing and increasing childhood activity," he said.
"This research is the first of its kind anywhere in the world and is a big wake-up call for all of us."
The study, which is based on responses from more than 130,000 children aged five to 16 in England, found evidence of a gender divide, with boys more likely to be active every day than girls – 20% of boys versus 14% of girls.
This rift increases as girls get older, with a large gap opening from the end of primary school.
It also shows that children from the most affluent families are more active than those from the least.
Two out of five (39%) children from the least affluent families do less than 30 minutes of activity a day compared with a quarter (26%) of those from the most affluent families, the research carried out independently by Ipsos MORI found.
The Active Lives Children and Young People survey is the largest ever carried out of its kind, and provides comprehensive insight into how children in England are taking part in sport and physical activity both in and out of school.
Other findings include that more than three-quarters (77%) of children can swim 25 metres unaided by the time they leave primary school.
However, 86% of children from the most affluent families can swim 25m unaided compared to just 42% from the least affluent families.
Activity levels peak at the end of primary school to the beginning of secondary school, but no age group reaches a majority of children doing the recommended levels of 60 minutes a day, every day.
There is also not a lot of difference in the amount of sport and physical activity that takes place inside school, compared to activity levels outside of school, so researchers said both have a critical role to play.
The figures show 28% of children are active in school for at least 30 minutes a day while 22% of children are active outside of school.
Mr Hollingsworth said: "I am calling for a national focus on the health and wellbeing of our nation's children, and for the whole system to be united in delivering change.
"Our children deserve better and Sport England is determined to play its part.
"We all care about the health and wellbeing of our children. These results tell us that what is currently being done to support them is not enough and change is required."
He said further research will be published in March on the attitudes of children to sport and activity, showing what they like about being active.
Sports Minister Mims Davies said: "While it is encouraging that three million children do at least an average of 60 minutes of sport or physical activity every day, the number of young people who are not doing enough is simply unacceptable.
"We know that an active child is a happier child and efforts must be stepped up to encourage young people to live healthy, active lives, and I know that Sport England are committed to making progress in this area.
"Our School Sport and Activity Action Plan will also ensure that all children have access to quality PE, sport sessions and clubs. Together with the sport sector, parents and our local communities, we must build a comprehensive and cross Government offer to create a truly active nation."
Dr Alison Tedstone, Public Health England (PHE) head of diet, obesity and physical activity, said: "Physical activity is crucial for good physical and mental health of children and young people – this work is a timely reminder for everyone to do more to help them be more active."
To maintain a basic level of health, children and young people aged five to 18 need to do at least 60 minutes of physical activity every day, according to the NHS.
This should range from moderate activity, such as cycling and playground activities, to vigorous activity, such as running and tennis.
On three days a week, it said these activities should involve exercises for strong muscles and bones, such as swinging on playground equipment, hopping and skipping, and sports such as gymnastics or tennis.