The guidance recommends that settings - including special schools, foster placements and children's homes - need to have "sound measures in place for training and developing staff" so that the use of restraint is kept to a minimum.
Every setting, it says, should train staff in how to support positive behaviour, de-escalate challenging situations and how to make split-second judgments of the risks of carrying out unplanned restraints.
It calls on services to carry out due diligence to ensure the trainers they use are of a high quality and to create clear policies on how they will maintain and review their training programmes.
"Staff should only use restraint techniques for which they have received training and can demonstrate competence," the guidance states.
"The setting or service should record the methods that a member of staff has been trained to use."
The proposed guidance is non-statutory but both Ofsted and the Care Quality Commission will have regard to its advice when inspecting services.
Its publication follows on-going concern about the restraint of children with learning disabilities, autism and mental health needs.
In April a BBC investigation found that 13,000 children in English, Welsh and Scottish special schools had been subjected to physical restraint in the past three years, resulting in more than 700 injuries.
The guidance also says settings should have transparent accountability arrangements and engage young people in the creation of individualised behaviour support plans that are kept under constant review.
Meanwhile, local authority and NHS commissioners should ensure providers have the skills needed to eliminate unnecessary restraint and be willing to take prompt action when providers fail to meet their contractual obligations on the issue.
The guidance also suggests non-hospital settings consider adopting schemes similar to the "hospital passport", which provides professionals with no prior knowledge of an individual with important information about managing and preventing challenging behaviour.
"Behaviour is a means of communication and all behaviour has a purpose," says the guidance, which was written by the Council for Disabled Children on behalf of the Department for Education and Department of Health.
"Behaviour that challenges may signal a need for support. Behaviour policies and practice should recognise this and support children and young people to develop alternative ways of expressing themselves that achieve the same purpose but in more appropriate ways."
Amanda Allard, assistant director of the Council for Disabled Children, said: "Being restrained, whether it be physically or through the use of medication, can be a deeply distressing experience for disabled children and young people and those with complex mental health needs.
"We hope the guidance being developed will decrease the number of incidents when restrictive practices are used, and reduce the impact of restraint on children and young people."
A consultation on the guidance will run until 24 January.