Four in five children are not doing the recommended daily amount of physical activity and spend more than two hours in front of screens every day.
The National Heart Foundation will release a 13-point plan for government and communities to increase physical activity in children and adults on Thursday.
The Blueprint for Active Australia will be released at Sport Medicine Australia's be active 2014 conference in Canberra.
National Heart Foundation chief executive Mary Barry said physical inactivity cost the economy $14 billion annually and caused 16,000 premature deaths.
"Despite the perception that we are a very active nation, the statistics and the evidence tell us otherwise," Ms Barry said.
"We really need to get moving, get our kids moving, encourage them to walk, cycle to school and try and future-proof them from chronic disease."
Research shows four in five children do not meet national guidelines of one hour of physical activity per day, while only one in five secondary school children and a third of primary school children walks or cycles to school.
Heart Foundation employee Anthony Burton, of Ainslie, knows how hard it can be to get children to do enough physical activity, which is why he and his wife walk with their children along their routes to school every day.
The 42-year-old and his wife also both cycle to work after dropping the children at school.
"It's a really important part of our daily routine and it's part of connecting with the kids, but also we recognise it's really important to get them out and [being active]," Mr Burton said.
The Heart Foundation's blueprint outlines 13 action areas, such as active travel, children and young people, prolonged sitting, older people and disadvantaged populations, and is aimed at increasing physical activity in Australia.
National spokesman for active living Trevor Shilton said there were 6.4 million adults who did not meet physical activity guidelines.
He said the country's "inactivity crisis" was everyone's business.
"It's about parents, yes it's about schools, it's about local government authorities, it's also about the government authorities, it's also about the government, the people who plan the environment, who build the parks, who make it safe to walk and cycle who provide comprehensive physical education in our schools, it is a governmental responsibility," he said.
Ms Barry said governments needed to view physical activity as a central part of health policy "because it's a powerful and central part of managing and preventing chronic disease".
Mr Shilton said physical inactivity was underrated as a risk factor for chronic diseases such as heart disease, type 2 diabetes and some cancers.
"If physical activity came in the form of a pill, we'd all be taking it. There is scarcely anything else which can provide such comprehensive health benefits," he said.