Primary school lunches have been described as "muck off a truck" by a group seeking higher food standards.
Many meals involve highly processed food, report says
A report from the Soil Association - which promotes organic produce - says the government spends about 60p a head on prison food and 35p on school food.
It says the country is storing up health problems as a result.
The report claims the government is failing to ensure children are given food that meets its own nutritional standards for England and Wales.
A snapshot of practice in a range of schools last term "confirms that the same trends now dominating choices in the supermarket and displacing fresh food from domestic kitchens are eroding the quality of school meals".
"With profit in the driving seat, 'convenience' foods have replaced time, labour and skill devoted to tasty and wholesome dishes made from scratch," says the report, written by Hannah Pearce.
"At the same time, the share of total spending given over to fresh ingredients continues to fall."
The low spending means low-quality processed food such as breaded fish or chicken shapes dominates menus, the association says.
These are high in fat, sugar and salt which can lead to diabetes, high blood pressure, stroke and coronary heart disease in later life, it says.
About one in 10 six-year-olds are now obese, and 15% of 15-year-olds.
Ms Pearce says the first step should be the monitoring of compliance with the government's guidelines for the type of food that should be served in schools.
In Scotland, an extra £63.5m is being spent over three years on school meal reform.
The Soil Association's report says a similar initiative should be set up in England and Wales, at an estimated cost of £200m a year.
The government did update the nutritional guidelines in April 2001 but the report says their implementation is not monitored.
It says a small number of schools have already made changes to their procurement arrangements by buying goods from local farms and preparing it in their own kitchens.
Others are working with contractors to ensure that healthier food is supplied.
The association says that, as a result, "dramatically" more children are choosing to take meals in these schools.
'Spiral of decline'
But across the country children and parents are voting with their feet.
The Food Standards Agency (FSA) said last month that more than half of all primary school pupils now took a packed lunch to school.
"As numbers fall viability declines, precipitating the withdrawal of hot school meals or the closure of kitchens, especially in smaller schools," says Ms Pearce.
"This further disadvantages children entitled to free school meals by sentencing them to a bag lunch for what was the main meal of the day. Everybody loses from this spiral of decline."
Fruit and vegetables
But the government insists it is "absolutely committed" to promoting healthy eating and encouraging schools to provide healthy meals.
A Department for Education and Skills spokeswoman said: "Key to this is the recommended daily intake of five portions of fruit and vegetables, which may be tinned, frozen or fresh.
"However, it is for schools and local education authorities to decide how much they spend on ensuring they can do this."
Vivianne Buller, chairman of the Local Authority Caterers' Association, said she was in favour of serving more organic, locally produced food in schools.
But council-run catering, she said, had to be self-financing and hitting the Soil Association's targets would end up costing parents more as organic ingredients were more expensive.
Children also wanted to eat food at school they were "familiar with" at home.
"The issue about reaching these targets is we would need to have a really radical change in the way we think about food in this country and our attitudes to it.
"Unless we as adults change, how can we force children to change?"