It will record all aspects of early life, from vaccinations to diet, and will automatically trigger an investigation if points of concern are raised.
"The proposed surveillance system is contrary to the basic principles of data protection and human rights law," said Professor Douwe Korff of London Metropolitan University.
"It replaces professional discretion (in both meanings of the word) with computerised assessments of human behaviour that are inherently fallible.
"The system violates private and family life and intrudes on children's rights without justification. The government's aims are laudable, but this is not the way to go about achieving them."
The report warns that the system, which is estimated to cost over £200m, will take resources away from full-time child care and create a system that is overloaded with information.
It also highlights serious data protection issues in the way the data is used, describing protections as "cavalier".
The FIPR report cited the case of police sharing information on a nine month-old child under the guise of "crime prevention", and another where a nine year-old child was taken into care after medical data was misinterpreted by so cial workers.
Over 400,000 civil servants will have full access to the database, which has raised privacy concerns among senior academic specialists.
"When building systems that process personal information, you can have scale, or functionality or security," said Professor Ross Anderson of Cambridge University.
"You can even have any two of these, but you cannot have all three. If we are to have secure and functional child protection systems, they will have to be local rather than central."
Criminal justice experts also have their doubts about the system. Professor David Farrington, the UK's most senior criminologist, whose work has been used extensively to justify the children's database programme, sounded a warning note.
"Caution is required. Any notion that better screening can enable policy makers to identify young children destined to join the five per cent of offenders responsible for 50 to 60 per cent of crime is fanciful," he said.
"Even if there were no ethical objections to putting 'potential delinquent' labels round the necks of young children, there would continue to be statistical barriers.
"Research into the continuity of antisocial behaviour shows substantial flows out of, as well as into, the pool of children who develop chronic conduct problems."
The FIPR report also raises questions over the legality of such a system. Article 15 of the EU Framework Directive states: "Member States shall grant the right to every person not to be subject to a decision which produces legal effects concerning him or significantly affects him and which is based solely on automated processing of data intended to evaluate certain personal aspects relating to him, such as his performance at work, creditworthiness, reliability, conduct, etc."
- FIPR Report: Children's Databases - Safety and Privacy (PDF)