Children expelled or at risk from exclusion from school should be offered an alternative curriculum based on group activities instead of a place at a pupil referral unit, says UK Youth.
John Bateman, the charity's chief executive, called for more alternative education provision around the country at a conference held to discuss its Youth Achievement Foundations, which offer a vocational and activity-based curriculum.
And a report by academics has praised its activity-based Youth Achievement Awards programme, noting that it could be a key to helping disaffected young people.
Mr Bateman told The TES: "Now is a very exciting time for education. There are good things happening, but we have reached a plateau of young people not achieving properly and realising their potential. This is because their needs have not been addressed and they continue to be disaffected. They bump along the bottom of the school system.
"This is not a criticism of teachers," he said, but those disaffected by school can find UK Youth provision is "a catalyst to get some accredited qualifications".
"It can be a stepping stone to opportunities not available in normal schools."
The first Youth Achievement Foundation is 7KS South Park Enterprise College in Scunthorpe, where pupil attendance is 94 per cent. Children have to complete projects, called "learning challenges", and about 80 per cent achieve a qualification.
This year, six foundations have opened, or are due to open, in Bournemouth, Bristol, Gloucester, Macclesfield, the Tees valley and Kent, following a Pounds 4.1 million grant from the Department for Children, Schools and Families.
Mr Bateman said UK Youth would like to take part in discussions about pupil referral units. MPs are set to debate proposals to make the units more accountable and better quality, as set out in the white paper "Back on Track". The proposed legislation would also seek to give them a more positive image.
Mr Bateman said: "Some pupil referral units are successful and others less so. It's hard to generalise, so we think local authorities should offer a range of provision.
"Things have to change to meet the learning needs of children in the 21st century and we are would certainly be interested in having a conversation and putting forward our ideas as part of 'Back on Track'."
Sending a child to a pupil referral unit is usually a temporary measure, but most children attending a foundation will complete their education there. The majority are sent to the units aged 15 or 16.
Researchers at Teeside University have praised the qualification offered at the foundations. An evaluation of the Youth Achievement Awards, "Small Steps and Giant Leaps", published last month, noted that young people feel more engaged with education at the foundations, compared to school, and are well supported by staff. The programmes help them to become more sociable and leave them motivated, with high aspirations. The accreditation also helps to make them more employable.
"They felt more confident, showed commitment and dedication to the challenges provided to them, and increased their ability to concentrate and work with others," the report said.