Lydon said: "Building on the ongoing work and the consultation processes in place now is the opportunity to assess where we are and how we measure up against the rest of rugby.
"The U20 team, coaches and support staff deserve huge praise for the courage, commitment and skill they showed this weekend in defeating Italy U20s.
"However, we fell well short some four days before that when losing heavily to New Zealand and, as a Union, we must now show our resolve to learn lessons no matter how harsh they are."
He revealed that the first phase of the examination has all ready begun on the current competition and will include the games still to be played, as well as the preparation, implementation and execution of plans for the U20 Junior World Championship.
Phase two will involve searching questions over the links that currently exist between the potential elite pathway structure and the underpinning elements of the clubs, schools and colleges.
"We will need to further consider the supporting programmes and competition formats with a view to recommending further carefully planned reform," he said.
The report is scheduled to be concluded by the end of July this year and will then be shared with the Rugby Management Board and the other relevant union committees before going forward to full WRU Board for ratification.
It is envisaged that, where possible, agreed reform will be introduced immediately with full implementation, including the already agreed Premier Division reforms, planned in time for the start of the 2012/13 season.
Lydon said: "The defeat by New Zealand hurt us all and we will not allow the questions it highlights to go unanswered.
"There is no blame here but there has to be honesty and realism. We will continue to lead the process which has and will involve all key stakeholders in order to utilise all the expertise and knowledge at our disposal.
"There will be a detailed examination of our own systems and structures along with a thorough analysis of what other nations are doing.
"We have made enormous steps forward in the structures we now have in place but to develop further and achieve sustained success at all levels, there can be no shying away from the task ahead, the scale of which was highlighted by the defeat suffered at the hands of New Zealand U20s.
"I am confident that through cooperation we can make the necessary changes that will provide enhanced and sustainable success.