Professionals are actively making some children "fit a certain category of disability in order for them to get a resource" even though they "don't theoretically meet the actual label".
NCSE chief executive Teresa Griffin said she had been told first-hand by professionals that they had purposely misdiagnosed children in primary schools.
"We think that's really bad that a child would be labelled simply to get an educational resource," she said.
Under the current system, students require a formal diagnosis of conditions like Attention Deficit Hyperactivity Disorder (ADHD) before an extra teaching support is provided by the Department of Education.
This has led to a series of problems, including claims it reinforces disadvantage because parents from wealthier backgrounds can afford to pay for private consultations.
Many students in the public system are on long waiting lists and do not have the right to access special support until they receive a diagnosis.
The Department of Education told the Irish Independent it was aware of Ms Griffin's concerns and had been working with the NCSE to create a new model to distribute special resources. "The department would be concerned at the possibility that any child would be labelled unnecessarily and accordingly accepted and acted upon the advice received from the NCSE.
"The department has taken steps to address this concern and has developed the new model for allocating resource teaching supports which, when implemented, will remove the need for a diagnosis of a disability to ground the allocation of resources," a spokesperson said.
A date has not yet been set for the introduction of the new system, but the spokesperson said Education Minister Richard Bruton anticipated it would be approved by Cabinet in time for September 2017.
A guide for parents compiled by the NCSE states that many professionals "feel obliged" to label children as having a disability "simply to ensure that the school gets additional resource teaching hours".
And speaking at an Oireachtas hearing recently, Ms Griffin said the labels being attached to children would stick with them for life.
She said assessments should only be used to help teachers and parents understand a child's needs but not linked directly to resources.
She said: "It's assessment to inform parents on how to better support their children, but not necessarily to have a child labelled as ADHD or have a child labelled as having emotional behaviour disturbance."
Asked by Fianna Fáil's education spokesman Thomas Byrne whether those carrying out the misdiagnoses could be guilty of professional misconduct, Ms Griffin replied: "We have actually raised it with some of the bodies and their view is that they are advocates as well."
The Department of Education said: "Where parents have concerns as to the resulting diagnosis or label applied to their children, they should, in the first instance, raise them with the diagnosing professional.
"If they are not satisfied with the response, they may raise the matter with the governing or regulatory body appropriate to the professional concerned."
Under the new plan, schools will have a larger say in deciding a child's support need, with over 10,000 support teachers assigned based on a school's profile rather than individual children.