The national curriculum must be changed to allow every pupil to design and make models, according to a two-year study.
Children encouraged to make things at school develop practical skills essential for study and work, researchers found.
The study, commissioned by the Craft Council, which promotes the use of crafts in modern life, showed that creative practical work improved spatial awareness, dexterity and problem-solving as well as developing analytical, language and numeracy skills.
The Craft Council has called on the Qualifications and Curriculum Authority to emphasise the "making component" in art, design and technology syllabuses in its revision of the national curriculum planned for 2000.
It believes craft-based work should be a crucial part of the curriculum and the exam system. The council warns that computers should not be a substitute for "the whole experience of making".
The report said: "This has implications for lifelong learning and employment. Craft-based education in schools and colleges provides skills for everyday life and leads to satisfying careers.
"Aside from the obvious commercial applications of creative learning, making is a pleasurable experience. Creative practical education is one of the best investments that this country can make."