The Healthcare Safety Investigation Branch (HSIB) said the small, round batteries can cause serious harm and even death when swallowed.
The warning comes after the safety body began an investigation into the death of a child who swallowed a button battery earlier this year.
Although the inquiry has not yet been completed, it said the evidence gathered so far has been compelling enough to issue the safety message in time for Christmas.
HSIB said the danger with button batteries begins as soon as the battery comes into contact with a wet surface, such as in the oesophagus, nose or ear.
This causes the battery to start to discharge its “current” and begin a chemical reaction, causing significant damage to the surrounding tissue.
Within a couple of hours, serious internal burns can occur in the upper chest region, leading to long-term problems with breathing and swallowing – and even death.
If a child is thought to have swallowed one, they should be taken to A&E immediately.
The safety body warned that small children are at higher risk due to their tendency to put things in their mouths, and people should be particularly vigilant to button batteries with a diameter of 20mm or more as they are more likely to get stuck in the throat.
More information on button batteries and their dangers can be found on the Child Accident Prevention Trust website.
HSIB medical director Dr Kevin Stewart said: “These batteries pose a very real risk to small children and babies, and the consequences of swallowing a button battery can be truly devastating.
“This is why we are calling on families this festive period to be extra vigilant and to put in place some basic precautions around their house.
“It’s important that everybody knows that these batteries can be found everywhere, from toys to gadgets such as remote controls, digital scales and car fobs. The best way to protect children is to place everything securely out of reach.”
Dr Rachel Rowlands, of Leicester Royal Infirmary, said the batteries can cause fatal injuries even if they do not have enough charge to power a device.