The multi-discipline event, announced by Gordon Brown, will run every year in the run-up to the 2012 Olympic games in London.
Professor Margaret Talbot, chief executive of the Association for Physical Education, said: "It mirrors other countries where major youth competitions are part of the sporting fabric.
"At the moment, there are no multi-discipline events of this kind. It is all very well having competitions in football, rugby or cricket, but children -particularly young children - need to consider the breadth of sporting activities which are out there before focusing on one discipline."
The inaugural schools Olympics will be hosted in Glasgow, before moving to different cities throughout the UK.
Professor Talbot added: "Although this investment is welcome, there seems to be a real lack of joined-up thinking by the Government when it comes to youth sport, particularly as it has just cut PE teacher training numbers by 20 per cent."
Meanwhile, private schools' representatives this week denied that extra cash for state schools would draw children away from the sector.
The Chancellor, pledged that in the next five years per-pupil funding in the maintained sector would eclipse that in private schools - around pound;8,000 per pupil, not including boarding fees.
The announcement came as the Independent Schools Council indicated that private schools should actually consider reducing fees in the next five years as competition for pupils grows.
Jonathan Shephard, ISC general secretary, suggested that children could be taught by experts over the internet rather than teachers in classrooms in future as schools look for new ways to cut costs.
However, speaking in the wake of the Chancellor's announcement on Wednesday, an ISC spokesman denied that the state-school funding increase would pose an additional threat to private schools.
"We welcome the additional spending on education and hope that the increase in the maintained sector will enable more children to achieve to their full potential," he said. "We don't believe, however, that it will cause more children to move away from the independent sector.
"There has been no movement in that direction since 1997 (when Labour came to power) and we do not think that will change."