The umbrella body Children in Scotland (CIS) has written to the First Minister asking for the Scottish Government to use European Structural Funds to develop early years services and fully integrate education and care for children.
The European Commission has already urged countries to increase investment in early years services through the funds, which are available to all member states to support economic development.
Launching a report, Welcome to Our World, on early education and care, CIS said investment in early years children's services would be repaid through increased ability of parents to work and reductions in social problems. Children do better in countries where education and care for youngsters are integrated, not seen as separate.
CIS said welfare concerns are clear from the fact that approximately one-quarter of all children referred to the Children's Hearings System are aged four or under, and the proportion of young children being referred to children's panels is rising.
CIS is asking ministers to make better children's services a priority in current discussions to set European budget priorities for 2014–2020.
Bronwen Cohen, CIS chief executive and joint editor of Welcome to Our World, said: "Scotland is failing its under-threes and needs to develop its early childhood education and care services in line with countries whose systems work better for children and their families.
"Children under three do better in countries that have fully integrated early-years systems accessible to all children and families, and where learning is recognised as beginning at birth."
She added: "The European Structural Funds give Scotland the chance to develop the services young children and their families need, to invest in the infrastructure that will support economic recovery, and to become a European leader in early childhood education and care."
Although the Scottish Government has been praised for publishing an early years strategy, Scotland is trailing many other European countries in terms of provision.
For example, the European Commission's guidelines state that member countries should provide full-day places for at least 30% of under-threes. In Scotland, only about 5% of under-threes have access to full-day nursery care.
A spokeswoman for Children in Scotland added: "Out of 27 European countries, Scotland came 17th from bottom in terms of formal early years provision.
"We wanted to point out that it is wrong to say the money isn't there for improving this. The Scottish Government has an early years strategy and Europe has said this money can be used for the early years, so it is down to the Government to decide how to allocate it.
"Our view is that early years is as much part of the infrastructure as bridges, roads or railways."
A Scottish Government spokesman said: "The Scottish Government has an ambition to make Scotland the best place for children to grow up.
"This Government has made a significant investment in early learning and childcare, including £4.5 million towards early learning and childcare for looked after two-year-olds, and a further £4.5m to promote community-based solutions to family support and childcare.
"This is drawn down from a wider £270m Early Years Change Fund, which will accelerate and prioritise spend in the early years across the whole public sector."