Clarke said: "The absolute key is to ensure that there is a clear, simple funding stream for all young people's activities, so that people who want to develop activities can know where to go and how to deal with it."
The green paper plans will link in with Labour's election manifesto.
"Young people are seen as an important part of the third-term agenda and this will be reflected in the manifesto," said a Government source.
Clarke said he hoped the green paper would be published in November, but added that getting government departments to co-operate was "not always straightforward".
The Department for Education and Skills, the Home Office, the Cabinet Office, the Office of the Deputy Prime Minister and the Department for Culture, Media and Sport are all involved.
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