Not all games are suitable for all children, said the report.
Video games should have a "red button" parents can press to disable inappropriate games, says a report.
Drafted by a European parliament committee, the report backs games for children but says parents need help policing how and when they are played.
The committee said games have a "broadly beneficial effect" on the mental development of children.
The report comes as research shows that more than half of European children are unsupervised when using computers.
The call for the "red button" was made by members of the European Parliament committee on the Internal Market and Consumer Protection as it adopted a wide-ranging study of younger game players.
"Videogames are in most cases not dangerous and can even contribute to the development of important skills," Toine Manders, the Dutch MEP who drafted the report, told Reuters.
Games can help instill facts in children and encourage the use of important skills such as creativity, cooperation and strategic reflection, found the study.
Despite the positive conclusions, the committee said "not all games are suited to all age groups and the possibility of harmful effects on the minds of children cannot be ruled out".
Because of this, it said, parents needed more help to police which games their children play and for how long.
The report backed the European Pan European Game Information system (PEGI) and called for it to be strengthened and win more support from member nations.
PEGI is a voluntary system backed by many video game makers which bestows age ratings on titles.
The committee proposed that, while work was going on to improve PEGI and extend its oversight to online games, consoles and computers and games could be outfitted with a "red button" to turn off a machine or disable a game.
Research released by Microsoft on 10 February found that 51% of the 20,000 Europeans aged 14-19 it questioned browsed the web without parental supervision.