The group is to convene for the first time next month. It is intended that education authorities will become involved later this year - and that existing child protection guidelines will be updated.
Martin Henry, child protection co-ordinator for Edinburgh and the Lothians, said: "It's not just about selling sex on the streets and in saunas. Much of it happens behind closed doors, in communities where children and young people are finding themselves in exploitative relationships, swapping sex for favours, money, for material goods - or simply to secure a roof over their heads."
Children in areas of deprivation, living in care or who are runaways are most likely to be involved. But children at all levels of society could be affected. Mr Henry said: "Overall there is less parental supervision and more family break-ups. Meanwhile there is more sexual awareness among young people - and more pressure on them to have material goods."
Det Sgt Martin Black, a child protection officer with Lothian and Borders Police who will sit on the working group, said: "A number of cases of prostitution or exploitation have come to light which have involved young people, enough to give us grounds to press for this joint action between social work and police."
The working group is looking south of the border for models of good practice. Sue Gregry, social services manager in Nottingham, which adopted multi-agency approaches four years ago, says: "It is important the education department becomes involved. Very often child prostitutes are not attending school. The department should therefore try to ensure appropriate education is arranged. For children who are attending school, there may be important relationships with the teacher that can be built on to help the child break away from sexually exploitative activities."
Nottingham has, along with Wolverhampton, provided case studies in joint working over child prostitution. This led last year to the Department of Health issuing instructions to local authorities telling them to establish inter-agency protocols on child prostitution - and to make specific mention of prostitution in child protection guidelines.
The need for Scottish guidance on child prostitution is to be discussed in June at the next biannual meeting between the chairs of the multi-agency local authority child protection committees and the Executive. The development forms part of a multidisciplinary review of child protection announced by the Education Minister in March.
Anne Houston, director of Childline Scotland, said that of more than 2,000 children who called the helpline in the past year many talked about "an exchange of gifts with adults, often people who are a part of, or are known to the family. The gift forces the child into silence. They fear they will be blamed. That is clearly sexual exploitation."