Poor children are as much as two years behind their peers in educational achievement by age 14 and heading for a "downward spiral", a report says.
The report contains "stark facts" about poverty and achievement
Research for the Campaign to End Child Poverty says children from poor homes are up to nine months behind their peers before they even get to school.
This gap in achievement widens at every stage from then on, it says.
The government says it is working to improve opportunities for children from poor families.
The campaigners say the government must invest £4bn to meet its pledge of freeing children from poverty by 2020.
The report, Chicken and egg: child poverty and educational inequalities, focuses on the cycle of poverty into which poorer children are born and struggle to escape.
It sets out some "stark facts" about the reduced educational chances of those who grow up in poverty and looks at how this affects them at difference stages of their lives.
"As childhood progresses, so the gap widens, as pupils from the most disadvantaged backgrounds are the least likely to progress from weak performance in primary school to stronger performance in secondary schools," the report says.
"And these differences persist into higher education and the transition to the labour market."
It argues that the extent to which poverty and disadvantage remain in some families from one generation to the next is heavily influenced by education, or the lack of it.
But it also claims that because the education gap between pupils who are poor and those who are not widens, schooling does little to break the cycle of poverty.
"The gap in educational chances comes full circle when disadvantaged children fail to get qualifications, face poor job prospects as adults and then are unable to give their own children a good start in life," it says.
Report author Donald Hirsch said it was "amazing" the way the gap in achievement got wider and wider as children got older.
"Our ambition for the education system is that it compensates for an unequal start.
"In primary education in particular, you might hope that the education gap would start to narrow."
But the report claims that far from reducing the differences between children from different social backgrounds, the education system allows it to grow.
A particularly big jump occurs in the first three years of secondary school, according to research by the Department for Children, Schools and Families quoted in the report.
And by the time they are doing GCSEs, poor children are more than one and a half grades behind their peers.
The report concludes with a call for poverty to be tackled alongside the education gap.
"Unless both are done simultaneously, children growing up with unequal chances will become the next generation of parents without the resources to give their own children a good chance - and this "chicken and egg" cycle will continue."
The campaign wants the government to invest £4bn to halve child poverty by 2010.
The government says it is working to reduce child poverty and increase opportunities for children from poor backgrounds.
Schools minister Andrew Adonis said: "We know that education is an effective route out of poverty. Helping children from disadvantaged backgrounds - both in the classroom and beyond the curriculum - is one of our key objectives.
"Just like the Joseph Rowntree reports last week, this report chimes with many of the things we are already doing.
"For example, we announced in June that by 2010-11 we will spend over £1 billion more on narrowing the attainment gap through schemes across a range of ages - such as Sure Start Children Centres, extended schools, one to one tuition and personalistion."