Baroness Neuberger, chairwoman of the Commission on the Future of Volunteering, said a fundamental shake-up of the system was needed to make volunteering part of the "DNA of society".

A report by the commission called on Ministers to remove bureaucratic barriers.

In 2007, 49 per cent of people in England volunteered at least once a month to help people in a formal or informal capacity. The total annual value to the economy is estimated at £48.1bn.

In Manifesto for Change, the commission said the Government could boost volunteering further by adopting a position of non-interference and resisting the temptation to develop new initiatives.

Launching the report today, Baroness Neuberger, a Liberal Democrat peer and the Prime Minister's special adviser on volunteering, says: "Our vision is a society where volunteering is part of our DNA so that by giving time, we enrich our own lives and those of others.

"But at the moment, too many people are being put off volunteering. Many people come forward to offer their time and skills, but red tape and unnecessary bureaucracy get in the way."

She continued: "It is time to rethink the obsession with any risks that might be involved and to remove financial obstacles which many people experience when they try to volunteer.

"We also need to avoid time-consuming criminal record checks, unless volunteers are working with children or vulnerable adults."

Among the commission's recommendations is the setting up of a working group to find ways of removing barriers to volunteering. It added that a three year annual fund of £5m should be provided for partnerships between local organisations and local authorities to modernise the infrastructure and support strategic development.

In addition, an Access to Volunteering Fund, with initial funding of £1m, should be piloted.

The commission's report criticises parts of the volunteering sector for failing to address the needs of sections in society.

It noted that groups including disabled people, those with mental health problems, asylum seekers and refugees often find difficulties when volunteering.

Baroness Neuberger said: "On the whole, it is large UK businesses that are embracing the benefits of staff volunteering schemes.

"I am really disappointed at how little leadership has been shown by both the public and voluntary sectors in opening up volunteering opportunities for their members of staff.

"They should be leading by example and developing their own employer-supported volunteering schemes."