The Government must scrap the current vetting system for those working with children, a think-tank has said.
Civitas said the Vetting and Barring Scheme (VBS) risked combining with a broader culture of fear to 'poison the relationship between the generations'.
Home Secretary Theresa May had already suspended the 'draconian' scheme in June so a review could be launched.
She said it was time for a more 'common sense' approach to assessing people who worked with children and vulnerable adults which did not risk alienating volunteers doing valuable work.
A Civitas spokesman said: 'If the government fails to halt the VBS, the scheme will continue to poison the relationship between the generations, intersecting a broader culture of fear, which creates a formal barrier between adults and children.'
Civitas said the system went against the government's 'Big Society' idea, and 'actually increases the risks to children'.
The organisation said problems included:
More than 12,000 innocent people erroneously being labelled as paedophiles, violent or criminals
Councils banning parents from playgrounds, saying only vetted 'play rangers' would be allowed in
Parents running into difficulties when trying to share the responsibilities of the school run
Frank Furedi and Jennie Bristow, who wrote the Civitas publication Licensed To Hug, said: 'The VBS has interfered with parents' ability to make private arrangements, subjected a quarter of the population to intensive scrutiny of their personal lives, discouraged volunteering and institutionalised mistrust between the generations.'
Children's charity Childline president Esther Rantzen said society had to accept there were limits to how far children could officially be protected.
She told the BBC: 'I would say if you have any conviction for any crime of violence or any conviction which may be appropriate, you should be barred from working with children.
'But that's a very different thing to this extraordinary industry that's sprung up where people get soft intelligence on police computers, which has no evidence to back it up, and use that to bar people from employment. And when volunteers find it so difficult, writers can't go and read their work in schools.'
However, children's charity Barnardo's said the system should be adjusted but not scrapped.
Chief executive Martin Narey said: 'Much as it might be unpleasant to stomach, this scheme is necessary to protect our children, as adults who seek to harm children can be uniquely manipulative in gaining positions of trust.'
The NSPCC said the government needed to "'strike the right balance between keeping children safe and not deterring adults from volunteering or working with children'.
The VBS system was launched in October last year in response to the murder of 10-year-olds Holly Wells and Jessica Chapman by school caretaker Ian Huntley in 2002.
Set up by the Independent Safeguarding Authority, it was designed to prevent unsuitable people working with children and vulnerable adults, with employers facing prosecution for breaches.
An independent review of the scheme took place last year after complaints that volunteers were being discouraged because the registration net was too wide.
As a result, ministers agreed to vet adults only if they saw the same group of children or vulnerable people once a week or more, rather than once a month as originally proposed.
What do you think?
Is the Vetting and Barring Scheme (VBS) necessary to protect children, or does it simply foster suspicion and destroy trust?
Have you been affected by the VBS?