Increasing numbers of heads are recording excluded pupils as "authorised absences" either to help meet targets or to spare pupils the stigma of being labelled, the research by University of Leicester found.
Teenagers were encouraged to drop out of school and truancy was condoned, the study by the university's Centre for Citizenship Studies in Education concluded.
Many of the 26 schools visited by researchers were operating policies of "unofficial" exclusions so that they could discipline pupils while still meeting their targets, the study by Professor Audrey Osler, Rob Watling and Hugh Busher found.
The report said: "This practice, we believe, constitutes a significant problem in a number of schools and is one which urgently needs to be addressed at a strategic level by local authorities and the Department for Education and Employment.
"Unofficial permanent exclusions my also operate particularly for some pupils in the final years of secondary school. These amount to long-term truancy which is encouraged and condoned by the school."
Unofficial exclusions, both short-term and permanent, were found to cause problems for pupils, their parents and schools, the study found.
Parents and carers could not challenge the school's decision, pupils were less likely to be found alternatives and local authorities were unable to support pupils if their officers were unaware the children were not in school.
The study was based on interviews with heads, teachers and governors in six local authorities.
Authority staff, welfare officers and educational psychologists were also questioned and schools' and authorities' exclusion paperwork was checked.
One of the headteachers told researchers: "If at the end of a long hard term one of those lads is being a right pain, then we'll agree with the parents that he has his holidays a bit early, to give staff, as well as children a break."