Child advocates want millions in new funding for a nationwide program to stop kids dropping out of school.

Save the Children says a recent Productivity Commission mental health report called for funding boosts to help with youth mental health issues in schools, and it wants to make that happen.

Save the Children CEO Paul Ronalds says the organisation's Hands on Learning program, already in place at 100 schools across Australia, helps address truancy issues.

He has called for $10 million funding over four years, allowing the program to target all students aged nine to 14.

“There's an undeniable link between disengagement from education during the middle years and poorer employment and health outcomes later in life,” Mr Ronalds said.

“This includes mental and physical health outcomes, and heightens the urgency to act.”

The program targets students deemed to be at risk of dropping out, offering alternative classes which address social and emotional development.

The Productivity Commission recently called for “proactive outreach services for students disengaged with school because of mental illness”.

Its report said a year nine student with a mental illness can fall up to five years behind a student without one.

Save the Children says there is evidence of a 54 per cent drop in unexplained absences in students under its program.