Young children could be identified and targeted for early help if they had many risk factors for juvenile crime, the report says.
Low birth weight and problems as a newborn, poor performance in IQ tests at the age of three, and aggressive, hyperactive, impulsive or disruptive behaviour in early childhood are key indicators which could be identified by health visitors.
Lax parental supervision and living in a poor neighbourhood gives a higher risk of becoming a problem teenager: neighbourhoods where large numbers of young offenders live are more deprived as measured on a Department for Education and Employment index.
Although predicting local areas in which children are most likely to become delinquent picks up three-quarters of individual offenders, it also massively overpredicts the numbers of children who will be affected.
More accurate predictions come from looking at families. Inadequate parenting is strongly associated with later offending. Parental neglect, poor maternal and domestic care under the age of five, family conflict and the absence of a good relationship with either parent all increase the risk of behaviour problems and subsequent criminal activity.
Moreover, parents who rely on harsh punishment or who are erratic in their discipline are twice as likely to have children who get into trouble.
Rows between parents and belonging to a stepfamily are also indicators of later problems. And family members who themselves take part in crime are likely to influence children to do so as well.
The Audit Commission suggests that the provision of help for parents and structured nursery education can help offset these early problems.
"Local education authorities should consider targeting schemes to provide intensive, structured pre-school education and home support for three and four year olds, in which parents are involved, to areas of high risk and deprivation; and they should be evaluated. Providers of pre-school education should consider helping parents to reinforce the discipline that they teach, " says the report, citing the evidence of the American HighScope scheme which ultimately saved seven dollars for each dollar spent.