It found that many more British children 'than thought' are falling into the clutches of sexual predators because they are not being adequately protected by the authorities.
The thousands of known victims who were groomed for sex by adults in the past three years are believed to be the 'tip of an iceberg', experts have warned.
Authorities are failing properly to investigate the problem, which the Child Exploitation and Online Protection Centre (Ceop) has described as a 'hidden issue' in British society.
The information on child grooming is so inaccurate that in almost 40 per cent of cases the ethnicity of the perpetrator is not known.
However there are fears the report could provoke a row about ethnicity despite it being expected to say that the problem cannot be associated with a particular ethnic group. There was anxiety within the civil service about how to 'present' the publication, due to be released next week.
Keith Vaz, chairman of the Commons Home Affairs Select Committee, said that much more work needed to be carried out to find out the scale of grooming across the country.
'The findings are a cause for enormous concern because it appears to be a much larger issue than originally imagined,' he said.
He warned against stigmatising particular communities but said: 'If indeed it requires upsetting groups or individuals, it just has to be done.'
More than 2,000 young victims of grooming have been identified since January 2008 - but they are likely to form just a fraction of the total number affected, the report is expected to reveal.
The report comes after the ringleaders of a gang which subjected a string of vulnerable girls to rapes and sexual assaults were jailed indefinitely earlier this year.
Abid Saddique and Mohammed Liaqat, who were each married with a child, cruised the streets of Derby in a car for victims while their unsuspecting families waited at home for them.
The vulnerable children were plied with vodka stored under the seats and taken to parks, hotel rooms or houses, where they were sometimes offered cocaine before being pressured into sex.
Some of the victims were runaways, and Ceop has found that missing children or those who run away from home are the most susceptible to grooming. Read More