Excluded pupils cost the taxpayer more than twice as much as it would have taken to educate them full-time, according to a study.
The New Policy Institute's findings show that Britain's 12,000 permanently excluded youngsters cost pound;81 million in 1996-97 in police, social services and health bills compared with the pound;34m cost of keeping them at school.
The study found that excluding youngsters is a waste of money and leads to juvenile crime.
Metropolitan Police figures show that one in three offences committed by young people occurs during school hours.
An Audit Commission report in 1996 found that 42 per cent of school-age offenders who had been sentenced in the youth court, had been excluded.
The study, Second Chances - Exclusion from School and Equality of Opportunity, found that one in six excluded children never returns to full-time education. Two-thirds of exclusions occur in a quarter of secondaries.
Nick Donovan, one of the authors of the report, said: "This is costing the country dearly in direct financial terms, and in lost talent, crime and social exclusion." He added that schools with a high incidence of exclusions should learn from those who use expulsion only as a last resort.