Sugary drinks should be taxed at up to 20p a litre, say health campaigners – with the proceeds helping to pay for free school meals.
Food and farming charity Sustain said the Government could raise £1bn a year from the duty, while also saving lives by cutting excessive consumption of unhealthy drinks.
The report has been backed by more than 60 organisations, including the Academy of Medical Royal Colleges, Friends of the Earth, the National Heart Forum and the Royal Society for Public Health.
Diet-related illness is now costing the NHS £6bn every year, said the report.
Sustain urged Chancellor George Osborne to introduce the duty in his March 20 Budget and to channel most of the cash raised into a Children's Future Fund for programmes to improve children's health.
Money could be spent on campaigns to encourage youngsters to eat more fruit and vegetables, the report said.
The group's campaigns manager, Charlie Powell, said: "Sugar-laden drinks are mini-health time bombs, contributing to dental diseases, obesity and a host of life-threatening illnesses which cost the NHS billions each year.
"We are delighted that so many organisations want to challenge the Government to show it has a public health backbone by including a sugary drinks duty in Budget 2013.
"It's a simple and easy-to-understand measure which will help save lives by reducing sugar in our diets and raising much-needed money to protect children's health."
Sustain chairman Mike Rayner, of Oxford University's Department of Public Health, added: "Just as we use fiscal measures to discourage drinking and smoking and help prevent people from dying early, there is now lots of evidence that the same approach would work for food.
"Our obesity epidemic causes debilitating illness, life-threatening diseases and misery for millions of people. It is high time Government did something effective about this problem."