The charity, which is one of the country's longest-established Christian organisations for younger people, spoke out as it announced plans to reach more than 100,000 kids with the true Christmas story this year.
Head of fundraising, Paul Stockwell told Premier: "We see surveys from different retailers where they ask children and young people what they think Christmas means.
"They're a bit of fun but they do show that knowledge of the Christian faith and the Christian story is slowing dwindling amongst the next generation."
Scripture Union unveiled on Thursday a new free and "accessible" story book, 'The First Christmas' [pictured above], which is written by award-winning author, Gemma Willis.
Most of the 105,000 copies already printed are being distributed to disadvantaged children - via foodbanks, hospitals and a charity which supports families where a parent is in prison.
While claiming youngsters are increasingly ignorant to the Gospel, Mr Stockwell added: "We were talking to children who don't attend church and they had a natural thirst... to ask the big questions and want to find the answers, and a natural inclination to pray."
Click here to listen to Premier's Alex Williams speaking with Paul Stockwell at Scripture Union: