The excluded have been identified by Peter Mandelson, minister without portfolio, as those on the edge of the labour force.
They include the 5 million in workless households; the 150,000 homeless, and the 100,000 children not attending school.
Moira Wallace, 36, a former senior Treasury civil servant, currently economics private secretary to Tony Blair, will head the unit.
It will answer directly to the Prime Minister, and there is to be a new Cabinet committee to secure cross-department co-operation. So far, the unit's 10 other recruits have not been named, but there are plans to second a Department for Education and Employment official.
Its remit has been set in the broadest terms by Mr Mandelson as tackling the problems of poverty, but among its target groups are likely to be parents without educational qualifications and the 8-10 per cent of teenagers who leave school without any qualifications.
According to Nick Pearce, research fellow at the Institute of Public Policy Research, the disaffected 16-year-old leavers are mainly white, working-class boys. Far more live in the North than the more affluent South-east. Among 17-year-olds there are more girls.
For policy-makers, the worrying feature is that the steady increase in the proportion of 16-year-olds staying on has not been maintained over the past few years. The explanation for this, says Mr Pearce, may be slightly better job prospects for the unskilled, combined with a lack of coherence in courses for that age group.
The IPPR project on 14 to 19-year-olds is six months away from completion, but interim conclusions suggest part of the solution might be to introduce more work-related courses and allow schools to adapt the curriculum to meet the requirements of those who might otherwise just abscond.
The key role schooling plays in breaking the cycle of deprivation that leads to the development of the so-called under-class is accepted by ministers. .
But in a paper to be published next month, two professors at the Institute of Education, Peter Mortimore and Geoff Whitty, warn that the Government's crusade to raise standards in schools does not include targeting extra resources at the disadvantaged. It suggests that the improvement rate at the bottom end is likely to be slow, leading to an even wider gap in attainment.
The paradox at the heart of present education policy, as relayed by Stephen Byers, standards minister, is that poverty is no excuse for low achievement in school - whereas the creation of the social exclusion unit is an acceptance that failure to deal with the cycle of deprivation leads to education problems and hefty welfare bills.