The government should adopt a "public health" early intervention approach to knife crime, MPs have advised.

A report from the home affairs select committee, published on Tuesday, said custodial sentences did not necessarily deter young people from committing more crime.

Committee chairman Keith Vaz said there had been a sharp rise in attacks and murders involving a knife since 2006, with reports of children as young as seven carrying weapons.

"We need a new tack here, at least partly based on making young people feel safer and reducing the exposure to violence in their lives," said Vaz.

The cross-party group of MPs had been impressed by the work of youth inclusion programmes and groups established to help young people get out of gangs, he said.

"It may be becoming a truism now, but we cannot escape the fact that at its roots this is about education and inclusion of young people before it is about criminal justice, and we strongly recommend that government adopts a 'public health' approach, that invests resources in prevention, to reducing knife crime," Vaz said.

"A rough estimate is that knife-enabled crime costs us £1.25bn a year. We heard convincing evidence of the long-term cost benefits of applying an early intervention approach, as well as the benefits to individuals and communities."

Alf Hitchcock, the Association of Chief Police Officers' lead on knife crime, told the BBC that while the report highlighted a worrying trend of young children carrying knives, "we also need to be very careful to say that the vast, vast majority of young people do not".

The increases in offences in specific areas could be linked directly to demographics and the level of deprivation, he added. "This is a generational issue and what we need to do is look at this in the 10- to 15-year term.

"We have to look at the underlying causes of the violence and look very carefully at parenting, at how people are normalised in society, and address the violence, rather than addressing the weapon at the end of the violence," Hitchcock said.

The home secretary, Jacqui Smith, said the report "recognises the hard work taking place up and down the country" in the Tackling Knives Action Programme (TKAP) areas.

She said provisional figures show a 31 per cent reduction in teenagers admitted to hospital for stab wounds in TKAP areas between June 2008 and January 2009, compared to an 18 per cent reduction in non-TKAP areas. The programme is now being extended to 16 areas with £12m funding over the next two years, she added.

"We are working closely with courts, the police, schools, charities, parents and young people to educate, enforce and most importantly prevent knife crime", Smith said.