A review of BBC programmes and services for children and young people is to be launched, the BBC Trust has announced.
Ofcom says 17% of UK children's output is home grown
Chairman Sir Michael Lyons said BBC programmes for young people had come in for some "harsh criticism".
Last year, regulator Ofcom called for a debate on UK children's TV saying just 17% of output was home grown.
Sir Michael, speaking at the Oxford Media Convention, said he was concerned by suggestions that other broadcasters could take some of the licence fee.
He said that, if such "top-slicing" resulted in a funding reduction, the BBC may not be able to fulfil its remit to serve the public.
Sir Michael said the review would try to ensure the BBC effectively engaged with children and was "not in danger of following the retreat of its commercial competitors".
He said there was a particular problem with appealing to young people - as opposed to children.
"We know they are watching less television in general and less news in particular, raising questions about how well the BBC can deliver its public purpose of sustaining citizenship among this audience," he added.
"We also know that what the BBC offers young people has sometimes been the object of harsh criticism - not always well-informed - and sometimes voiced by commentators well past their own first flush of youth."
Sir Michael said that while BBC services for children enjoyed "a high reputation", Ofcom's research had shown that high quality British-made children's content was "in some trouble".
Last October, Ofcom's report on children's TV said investment by ITV1, GMTV, Channel 4 and Five had halved in real terms since 1998.
It found that just 1% of children's programming was made in the UK and being broadcast for the first time.
It said that overall investment in new British children's programmes dropped by £18m from £127m in 1998 to £109m last year.
And it found that, in 2006, cartoons accounted for 61% of children's programming.
In his speech, Sir Michael also dismissed calls for part of the licence fee to be used to subsidise public service programmes for commercial broadcasters, who are losing advertising revenue because of increased competition.
"The licence fee delivers a degree of accountability that works strongly in the interests of audiences," he said.
"As far as the trust is concerned, we would like to see this degree of transparency increased, not diminished.
"Should we not think very carefully indeed before diluting or blurring the clarity and directness of the current licence fee arrangements?"