"We know that poverty experienced during the early years of a child's life is detrimental to their later mental health. We need policies to support families with young children to ensure that they grow up healthy and happy," Gibson says.
"It is time to stop putting the ambulance at the bottom of the cliff as a solution. Child poverty is a clear contributor to mental health problems. We need to address the problem at the root."
The report states that poverty rates were consistently higher for younger children, aged 0 to 11 years, compared to children aged 12 to 17; Maori and Pasifika compared to European/Pakeha; and where parents have lower levels of educational qualifications.
A total of 295,000, or more than one in four children aged 0 to 17 years, were living in relative income poverty.
An average 63 per cent of children in poverty live in beneficiary households and 37 per cent live in homes where one or more adults are in paid employment.
Sole-parent families were more likely to have children in poverty, at 53 per cent, compared to 47 per cent of two-parent families.
Children were also more than twice as likely to be in poverty than those aged 65-plus.
NZPsS president Quentin Abraham said if society wanted to improve the mental health of children, poverty must end.
"Some young people living in poverty show remarkable grit and determination and they may even succeed against the odds, but do we want to make their lives so hard and risk their mental health?"
All young people should have their basic needs taken care of.
"We need assurance that all young people and their whanau will have a home, food, clothing, access to a good education with carers who are not worrying about the basics to live, so that we can prevent mental health problems.
"We need a commitment from government to put our tamariki first and eliminate child poverty. Supporting the mental health and well-being of our children is vital to the future of our country," Abraham said.