The study of how learning has changed in the past five years found more demand for languages at AS-level but a decline in the take-up at A (A2) level.
Similarly, in higher education there has been a growth in demand for supplementary language study, but interest in specialist degrees has declined.
The report's authors, Professor Michael Kelly and Dr Diana Jones, of Southampton University, recommend that the A-level curriculum should be reviewed to identify how far a student's decision to embark on a course is influenced by the content of the syllabus.
They add that there should be more variety in language courses, and a fuller study of the role the private sector can play.
Professor Kelly said: "What really struck me was how the problems the UK is facing are similar to those faced by other countries. It is not just an issue of the Brits being bad at languages, it is a changing perception of the position of languages in the modern world."
The study focused on languages for 16 to 19-year-olds, but predicts the Government's decision to make them optional for 14-year-olds in September 2003 will lead to a decline of between 10 and 30 per cent in numbers taking GCSE.
* A new landscape for languages, by Professor Michael Kelly and Dr Diana Jones of the University of Southampton, commissioned by the Nuffield Foundation. www.nuffieldfoundation.org