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"Sidelined in Syria, ineffective in Ukraine, unwilling in Europe, inimical on refugees. A crisis of confidence has become a crisis of identity," said the report, commissioned by the London School of Economics (LSE).
"Whilst the world has never been more interdependent, we fail to recognise that future generations will judge us by the success we make of belonging to and making a contribution to global order," it added.
The authors, who include the former head of the parliamentary intelligence committee, the former British ambassador to Washington and the former head of MI6, urged politicians not to base Britain's foreign policy on self-interest.
"A unified national interest requires a singular identity that Britain's open, ethno-culturally diverse society should be proud to eschew," it said.
Instead, Britain should exploit its "hyper-connectedness and global outlook" to help shape global policies, creating "a country comfortable with its present status as an independent, confident, strong state."
The authors accused "a foreign-policy elite" of having a "fixation... on past imperial glories" that clouded decision-making on issues such as international trade and Britain's relationship with Europe.
"Our ambivalent relationship with Europe is in many ways a reflection of discomfort in our relationship with ourselves," said the report, highlighting the trend towards federalism within Britain.
Prime Minister David Cameron has promised an in-out referendum on Britain's membership of the EU by the end of 2017.
Britain was a fringe player during crisis talks following Russia's annexing of Crimea from Ukraine in 2014, and is not taking part in air strikes against Islamic State in Syria.
But the report also highlighted areas where Britain is taking a lead, including by highlighting the issue of sexual violence in war zones.
The report said this particular campaign was "a blueprint for how Britain's agenda-setting and convening power might be used on other issues."
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"Whilst the world has never been more interdependent, we fail to recognise that future generations will judge us by the success we make of belonging to and making a contribution to global order," it added.
The authors, who include the former head of the parliamentary intelligence committee, the former British ambassador to Washington and the former head of MI6, urged politicians not to base Britain's foreign policy on self-interest.
"A unified national interest requires a singular identity that Britain's open, ethno-culturally diverse society should be proud to eschew," it said.
Instead, Britain should exploit its "hyper-connectedness and global outlook" to help shape global policies, creating "a country comfortable with its present status as an independent, confident, strong state."
The authors accused "a foreign-policy elite" of having a "fixation... on past imperial glories" that clouded decision-making on issues such as international trade and Britain's relationship with Europe.
"Our ambivalent relationship with Europe is in many ways a reflection of discomfort in our relationship with ourselves," said the report, highlighting the trend towards federalism within Britain.
Prime Minister David Cameron has promised an in-out referendum on Britain's membership of the EU by the end of 2017.
Britain was a fringe player during crisis talks following Russia's annexing of Crimea from Ukraine in 2014, and is not taking part in air strikes against Islamic State in Syria.
But the report also highlighted areas where Britain is taking a lead, including by highlighting the issue of sexual violence in war zones.
The report said this particular campaign was "a blueprint for how Britain's agenda-setting and convening power might be used on other issues."
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