A survey for the charity suggests many parents are unclear about their legal responsibilities to children.
Children's Minister Tim Loughton said the government had made it clear that services must act more swiftly to safeguard children.
The 1933 Children and Young Persons Act, England and Wales, makes it a criminal offence to fail to provide a child with adequate food, clothing, medical aid or lodging - but the charity says that modern conceptions of neglect also include emotional and educational issues.
It is calling on the government to order a review of the law during this Parliament.
Dame Clare Tickell, chief executive of Action for Children said: "Neglect is the most common form of child abuse affecting children in the UK yet we have an outdated law which does not reflect what we now understand children need and what neglect actually is.
"The law leaves children unprotected and parents without support and unclear about their responsibilities until it's too late."
Shaun Kelly, a senior manager with the charity, told BBC News: "We want to see the law made more fit for purpose. It needs to be more flexible and able to trigger earlier intervention in neglected children's lives."
The charity wants a clearer definition of child neglect and says the law should focus on prevention and support for families rather than on criminalising parents.
Mr Kelly said he would like to see the boundaries between the criminal and civil legal systems become more flexible when it comes to child neglect cases.
For example, he said courts should be able to order parents to undergo treatment, counselling or parenting courses.
Mr Loughton said the government agreed that the best way to stop abuse and neglect was to intervene early before problems escalated.
"Children's welfare and protection is paramount... which is why we've made clear that children's services, police and NHS must target vulnerable families well before children are put at risk.
We asked Prof [Eileen] Munro to carry out an independent review of child protection last year, and she identified that services are often too reactive.
"We know that if help is given to vulnerable children and families as early as possible there is more chance of turning lives around and protecting them from harm."
A YouGov survey for the charity of more than 1,000 parents showed two-thirds felt the law on parenting was confusing.
Three-quarters agreed there was no common understanding of what was meant by "good enough" parenting.
Two-thirds would like to see a clear law defining parental responsibilities.
Only 16% said the law should not intervene in how parents raised their children, while 59% said the state had a duty to do so.