The problem of under-18s in England being groomed for sexual activity takes place "in far greater numbers than was ever imagined", the government warns.
Ministers say gifts such as money, food, drugs or alcohol are often used as a means of coercion.
They say robust strategies are needed to ensure children are not sexually exploited by gangs or individuals.
Children's Minister Tim Loughton is launching a plan to make sure agencies work together to tackle the problem.
The Tackling Child Sexual Exploitation Action Plan will bring together the police, the Crown Prosecution Service, local safeguarding children boards and support organisations like Rape Crisis.
The plan will also look at improving sex and relationships education in schools and helping parents know what tell-tale signs to watch out for.
In October, the deputy children's commissioner, Sue Berelowitz, launched a two-year inquiry into the scale and scope of sexual exploitation by gangs.
Ms Berelowitz said thousands of children could be affected and the issue reached across race and class.
Launching the action plan on Wednesday, Mr Loughton said: "This country has to wake up to the fact that children are being sexually abused in far greater numbers than was ever imagined.
"It could be going on in every type of community and in every part of the country.
"Too many local areas have failed to uncover the true extent of child sexual exploitation in their communities and failed to properly support victims and their families.
"Child sexual exploitation is child abuse, it is not good enough that some local areas don't recognise it as an issue.
"This is an extremely serious crime and must be treated as such, with the perpetrators pursued more vigorously."
Mr Loughton said it must be made easier for young victims and their families to go to court.
"It is worrying that many incidents go unreported because victims are unwilling to come forward," he said.
"The action plan is a big step forward and looks at sexual exploitation from the perspective of the young person, analysing what can go wrong and what should happen at every stage."