It says that too many youth workers are content to simply hold the hands of young people and sympathise with their troubles.
"Quality in the youth service is not as it should be," said National Youth Agency director Tom Wylie.
"Kids' expectations today are higher. They're used to centrally-heated homes, many of them have video recorders. Yet they're being invited to a 1960s concrete youth club that hasn't had a lick of paint in 15 years and the billiard cues are all broken.
"But the other thing is the quality of personnel. Many institutions are very good at turning out workers who are good at relating to youngsters, but they don't move them on enough."
Mr Wylie believes the best schemes, like community radio or video projects, can act as a gateway for young people to realise the talents and opportunities they have and point them in the right direction for further training in a more formal setting.
And that, he argues, could be vital to the success of the Government's Welfare to Work scheme in reducing unemployment among young people.
"These are young people who maybe haven't done terribly well at school but they could still be recaptured for learning if you can tap into their interests in ways that don't initially look like school or college," Mr Wylie said.
"One day they'll have to go on to the formal academic machinery. They won't spontaneously walk up to college and ask to be enrolled. But they are involved in youth work, and often that's the opportunity for a bit of basic skills development.
"We are trying to define and identify a curriculum that will do that. I think it will be crucial to Welfare to Work if that is to be serious."
The curriculum could involve basic skills, building self-confidence, and getting young people into the rhythm of the working day, as well as other skills such as information technology "just to get them to the starting point".
Labour has been quick to recognise the role the youth service can play in tackling disaffection among young people and in its Welfare to Work flagship. Often youth workers are the only adults outside the family in close contact with the young people the programme needs to reach.
The National Youth Agency is keen to seize on the opportunity. But it is also telling the Government that the youth service needs a more secure footing.
At the moment a patchwork of provision exists across the country, largely because councils need provide only an "adequate" service.
The Government's nationwide audit of youth services, announced last week, is one step towards addressing that patchwork. The NYA hopes that the autumn Green Paper on lifelong learning will clarify local authorities' duties.