A report by the education watchdog says while forces children generally do as well as other pupils, frequent school moves can have an adverse effect.
It says exam results can suffer and the uncertainty of having parents in conflict zones can lead to social and emotional problems for some children.
The government says it is providing cash to help schools tackle the issues.
It is allocating a ?200-per-pupil premium to provide pastoral assistance and a ?3m fund to help mitigate potential problems in schools with high numbers of services children.
Ofsted's report was commissioned by the Ministry of Defence to identify where support for service children could be improved.
Overall, forces pupils tend to do as well, if not better than the national average, but where there are high levels of mobility, performance is not so good, says Ofsted.
'Gaps in education'There was a clear recognition that the mobility associated with service life can have a detrimental effect on children, the report said.
This was particularly so when moves took place during GCSE years and could have a big impact on pupils' results.
It added that continual moves had a negative effect on these youngsters' friendships and their personal development, and they often had "gaps" in their education and needed help to catch up.
"The combination of deployment of a family member and regular moves of home and school can cause anxiety and stress for service families whether living in the UK or overseas: education is disturbed, social networks are disrupted and parents left behind have to cope with the effects of being a 'single parent'," the report added.
And it pointed out that schools reported an increase in the number of problems related to the social and emotional welfare of service children. This had led to a need for extra school-based counselling.
One pupil told inspectors he missed a "male presence" in the house and that he still worried about his father's placement in Iraq even though it was several years ago.
At another school, children were regularly heard to say: "Four more sleeps until Daddy is home!"
'Anxieties'Chief inspector Christine Gilbert said: "Service children often attend many different schools over the course of their school life. This makes continuity and progression in learning hard to achieve, and there is more we should be doing."
She added that information about each child's progress should be passed effectively from school to school to ensure their development and learning was as good as it could be.
"Service children are missing large parts of their curriculum and essential training in key areas, and they struggle to catch up. This is made all the harder for them given the anxieties about their parents when on active service."
The report called for the Ministry of Defence to keep a register of service children and young people in education and to allow greater flexibility in relation to movement dates for families of serving personnel.
It called on schools to be aware of the distinct needs of service children and to make any provision necessary for them. They should also improve the system for transferring children's records from one school to another when they move.
A government spokesman said the Department for Education did record numbers of service children in England's state schools but the list was not exhaustive.
He added: "Parents cannot be compelled to record their children as service children, and some prefer not to for fear of being treated differently."
The spokesman said: "Our servicemen and women risk their lives for this country and it is a key part of the Armed Forces Covenant that we support their families.
"The attainment by service children is, on average, above their peers, but they face the unique challenges and stresses, and that is why the government is providing a ?200-per-pupil premium to help provide pastoral assistance for them."
He said the covenant also included a ?3m fund to help mitigate potential problems that schools with high numbers of service children might experience.
Russell Hobby, general secretary of the National Association of Head Teachers, said he backed any moves which helped ease some of the unique burdens endured by service children.
Mr Hobby said: "The Ofsted report highlights the problems these children can face as they move to different areas while they may also be understandably anxious about the safety of family members serving in the armed forces."
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