The 63-year-old father-of-two, who was born in Britain but lives in Australia, said: "Kids are sensitised to please Mum and Dad, so here they feel they are part of your badges of success.
"Parents see their kids as a measure of them. We don't know if the parents transmit the stress of this to the child or if the child perceives it. So the kids feel they have to be good-looking, well dressed, have fantastic holidays and be rich."
Mr Biddulph, whose latest book is called Ten Things Girls Need Most: To Grow Up Strong and Free, added: "The sensitive, the open-hearted, the caring, the empathetic ones are the first to go. They are the ones you find in the middle of the night on the cold bathroom tiles, sobbing uncontrollably, while you ring for an ambulance."
An NHS survey last year revealed a worrying increase in girls as young as 12 self-harming, with one in four 16 to 24-year-olds having self-harmed. The study also found a rise in girls feeling "worthless and unhappy" with a third having depression.
The psychologist, who is best known for his 2010 bestseller Raising Boys, said he cannot "think of a childhood worse than what most Britons aspire to" for their offspring.
Mr Biddulph said British parents need to cut their work hours immediately and if possible take their children on a 'gap year' to travel.
"I think the British way of life is wrong," he added. "There is something about people in Britain not standing up for themselves; enjoying good incomes, but terrible lives."