The All Party Parliamentary Group for Children (APPGC) said current Home Office rules allow police officers only limited options when recording criminal behaviour, with many children receiving out of court disposals that result in them having a criminal record.
A report published by the group has called for changes in police procedures so that some incidents, such as "sexting" or fighting in residential children’s homes, can be dealt with in a different way by the police.
For so-called "experimental" behaviour, such as consensual sexting between young people of similar ages, the APPGC wants police to have greater discretion to refer a young person to another welfare agency to resolve the matter, without them getting a criminal record.
Baroness Massey of Darwen, co-chair of the APPGC, said: "The rules that dictate how the police record their response to criminal behaviour mean that many young people end up with a criminal record for trivial offences.
"We know for example, that teenagers are being added to police databases for sexting with their peers. In cases such as these, police should have the discretion to refer the child to another agency for support – their school, social services or counselling, for example – without it forming a permanent part of the record held against the name and undermining their future."
Greater discretion for police is one of a series of recommendations put forward by the group in today's report, which looks into progress made in the 12 months since its inquiry findings were first published.
The report states that significant progress has been made, with a national strategy by police chiefs to improve the policing of children being launched, but adds that gaps remain that mean children’s interactions with the police can be negative.
It wants rules around crime recording to be amended so call-outs to incidents in children's homes can be handled in a similar way as in schools.
In addition, it wants the review of residential care, announced last month that is led by Sir Martin Narey, to consider the management of incidents in children’s homes and make recommendations to ensure that the police are not called unnecessarily.