Pubs and shops serving alcohol just once to under-18s should have their licence revoked - that's the tough stance called for by the Liberal Democrats.
The Lib Dems believe that criminalising underage drinkers and their parents is not the way to combat the problem.
"As well as being illegal, it is grossly irresponsible for pubs and shops to sell alcohol to underage people," said Lib Dem leader Nick Clegg.
"The Liberal Democrats would change the law so that anyone caught selling alcohol to children will be fined and have their licence revoked at the first offence.
"If we don't act now, we risk creating a generation which has permanently gone off the rails: excluded from school, suffering mental health problems and at a higher risk of being involved in crime.
"Once again the Government is trying to create great fanfare for a new offence when criminalising people is not the best way to deal with this problem."
Clegg was responding to the Government's Youth Alcohol Action Plan launched yesterday.
The Liberal Democrats would change the law so that anyone caught selling alcohol to children will be fined and have their licence revoked at the first offenceNick CleggLib Dems
It makes voluntary schemes such as Challenge-21 mandatory and introduces a yellow and red card alert system for problem premises.
The "two strikes" rule in three months for underage sales will be implemented this month.
But police would also have more powers to deal with persistent underage drinkers and force their parents to take greater responsibility.
Clegg said new powers were not needed just greater enforcement of existing ones.
"Ministers have not learned that new offences are no substitute for enforcing the laws we have.
"Police and councils already have powers to confiscate alcohol, disperse groups, shut irresponsible bars and remove licenses. We need less spin, and more action."
The Tories said the plan amounted to "eleven years of inaction and now an ineffective action plan".
Shadow minister for children Tim Loughton said Labour should be "ashamed" at the levels of underage drinking, and called for "better education and better enforcement" to address this "health time bomb".