The Office of Children's Commissioner study says there were 2,409 victims in the 14 months to October 2011 - but the true number is likely to be far higher.
The report also identifies 16,500 children who were at "high risk of sexual exploitation" in 2010-11.
David Cameron told the House of Commons the report was "extremely disturbing" and should be studied carefully.
The report, titled "I thought I was the only one - the only one in the world", sets out the findings from the first year of a two-year inquiry.
It is the first study to set out the scale of the sexual exploitation of children and young people. It comes in the wake of the jailing in May of nine Asian men for grooming and sexually exploiting white girls as young as 13 in Rochdale, Greater Manchester.
It draws on figures for sexual abuse, young offending and child health from local authorities, police, health services, voluntary agencies and children and young people.
The authors list 13 risk factors they say may indicate that young people are subject to sexual exploitation and grooming. These include going missing, repeated sexually transmitted infections, misuse of drugs or alcohol, self-harm and other physical injuries.
Any child or young person displaying three or more of these signs is at "serious risk of sexual exploitation", says the report. The researchers say their figures identify 16,500 children and young people who fit this profile.
Details on perpetrators were harder to obtain unless they had actually been arrested, so it is difficult to be sure of their ethnicity, notes the report.
The deputy children's commissioner, Sue Berelowitz, said the evidence indicated the perpetrators "come from all ethnic groups and so do their victims, contrary to what some may wish to believe".
She cautioned the "model" of Asian men preying on white girls was just one of "a number of models".
"The failure of agencies to recognise this means that too many child victims are not getting the protection and support they so desperately need," Ms Berelowitz added.
Analysis of the reported ethnicity of more than 1,500 alleged perpetrators showed that about a third were white, the largest ethnic group.
"The reality is that each year thousands of children in England are raped and abused by people seeking to humiliate, violate and control them," said Ms Berelowitz.
"These have included children who have been abducted, trafficked, beaten and threatened after being drawn into a web of sexual violence by promises of love, and others who have suffered in silence for years as they are casually and routinely raped by the boys in their neighbourhoods."
She told BBC Radio 4's Today programme that in six out of 10 cases no information was available on ethnicity.
The authors say evidence to the inquiry indicates that in any given year the actual number of children being abused is far greater than the 2,409 confirmed in the report.
The report found evidence of inconsistent collection of data on child sexual abuse by health services and local authorities, no standardised process across police forces for recording sexual offences by multiple offenders nor of coding sexual offences against children.
"At local level this means that both data-sharing and the flagging up of possible cases are disjointed," it said.
"It is clear that sexually exploited children are not always identified even when they show signs of being victims."
The report calls for urgent action to protect vulnerable children from all forms of sexual exploitation. All agencies working with children should take immediate action to ensure that their operational staff are made aware of a list of warning signs of sexual exploitation, it says.
Ms Berelowitz urged parents and agencies to be aware of patterns of warning signs, telling the Today programme that agenices should work closely to parents and listen to them.
A mother and father, whose daughter was groomed and sexually exploited, told Today that parents were often made to feel part of the problem.
The mother said: "What [the authorities] tend to do instead is blame at the worst, or in the very least exclude parents and families."
"It [grooming] drives a wedge between the child and her family such that she begins to see her abusers, the exploitative men, as her friends and her protectors instead of her family."
"Parents are assumed to be almost irrelevant or negligent or to have contributed in some way to their children having become victims of sexual exploitation. That simply is not the case."
"Sexual exploitation can happen to anyone's child".
The father said agencies had to work with families to get better results.
"You begin to put the family back together again. Otherwise the effects of grooming is to split the family from top to bottom."
A spokeswoman for the Department for Education said: "Child sexual exploitation is child abuse and a very serious crime, which the government is committed to tackling.
"Since last year the government has been implementing a child sexual exploitation action plan to raise awareness, prosecute and jail criminals, protect young people at risk, and help victims get their lives back on track.
"We published a progress report on the action plan in July and will be publishing a further update in due course."
The plan also focused on improving the recording and sharing of data relating to the identities of victims and abusers, she added.
However a government source privately questioned some of the report's methodology and figures and called some of the language "hysterical". The report's authors countered that their use of statistics is sound and their language measured.
Andrew Flanagan, chief executive of the NSPCC, said: "Sex offenders come from all backgrounds but if there is a problem with one community in a particular areas we must be bold enough to address it and not just turn a blind eye.
"In recent months the NSPCC's specialist teams dedicated to helping children targeted for grooming and sexual exploitation have worked with around 70 girls from a range of ethnic backgrounds with the majority aged between 14 and 16, although some were as young as 11."
Councillor David Simmons, of the Local Government Association, said: "It's now vital that councils, the police, the health service and other agencies work more closely, and hand in hand with local communities, to stamp out this disturbing criminal behaviour.
The shadow home secretary, Yvette Cooper, described the report as a "wake-up call to government" and called for a clear action plan "to protect and support these children".
Thousands of children are sexually abused by gangs and groups in England each year, according to a report.