The study, Youth Index 2014, gauges young people's wellbeing across a range of areas from family life to physical health. It highlights the detrimental health effects of youth unemployment.
The report, which surveyed 2,161 16 to 25-year-olds, found almost a third of long-term unemployed young people have contemplated taking their own lives, while one in four have self-harmed. Worryingly, 40% of long-term unemployed young people had symptoms of mental illness, including suicidal thoughts, feelings of self-loathing and panic attacks.
Youth unemployment is a growing problem in the UK. Last month, figures from the Office for National Statistics showed that while the UK unemployment rate had fallen to 7.4% – the lowest level since 2009 – the employment rate of people aged 16 to 24 was down half a percentage point to 50.6%.
The Prince's Trust said urgent action needed to be taken as there is a danger of unemployed young people becoming "hopeless" as well as "jobless".
"Unemployment is proven to cause devastating, long-lasting mental health problems among young people," said the charity's chief executive Martina Milburn.
"Thousands wake up every day believing that life isn't worth living, after struggling for years in the dole queue. More than 440,000 young people are facing long-term unemployment, and it is these young people that urgently need our help."
Royal Society for Public Health chief executive Shirley Cramer said the study proved that unemployment is a public health issue.
"It is one that must be tackled urgently and it is essential that youth unemployment is added to the public health agenda," she said.