The Government has been accused of "turning its back on school sport" and undermining the Olympic legacy six months after the Games.
Shadow Sports Minister Clive Efford MP told the BBC: "What has gone on in school sport is absolutely disastrous."
Education Secretary Michael Gove is expected to announce a new strategy for school sport later this month.
Ministers say they are spending £1bn on youth sport over the next five years through Sport England.
But the government has abolished ringfenced funding for the national School Sport Partnerships (SSPs) and ended recommendation for two hours of PE in schools each week.
The SSP network enabled well-equipped 'hub' secondary schools to lend PE teachers to those that needed them, especially primary schools.
Two years ago it lost its £162m funding. Following protests, £65m was reinstated allowing the programme to run partially. But that is due to cease before the start of the next academic year in September, leaving concern about the future.
Against this backdrop, the government is preparing its strategy, with the help of advisor and London 2012 chairman, Lord Coe.
The focus will be on primary school children, but Efford is concerned that the Olympic legacy has already been undermined.
He said: "The SSPs were the foundation for building a national sports plan where we could get children active and keep them active.
"They took £162m, all of the budget, away from the Youth Sport Trust, who organised it. What we've seen is a postcode lottery now.
"That was just completely destroyed, we have nothing. The Olympic legacy is seriously undermined by what's going on in our schools.
"We need a long-term strategy blueprint to get sport into our schools.
"If we don't, we're storing up a huge problem for ourselves, for the economy and for the NHS. Doing nothing isn't an option."
Research has shown a 60% drop-off in the time dedicated to organising school sport, while a third of children leaving primary school are now obese or overweight.
An Ofsted report into levels of sport in schools over the past four years will be published in the next fortnight and is expected to show a fall in participation.
In addition to the £1bn spending on youth sport, the government also intend to extend the School Games, a scheme intended to boost competitive sport. Prime Minister David Cameron has said competitive team sports will be made compulsory for all primary-age children.
Lord Coe told the BBC plans were being put together by the Department of Education.
"The focus will be on primary school sport and that's important," he said.
"That's moving in the right direction. What we really want to do is give good quality physical education within the timetable, competitive sport in a properly managed environment, and give young people - particularly in state schools - the opportunity of high quality PE."