Increasing population pressure is increasing the demand on agricultural systems in many parts of the world and this has often led to the degradation of the soil resource. Soil carbon (C) is a major determinant of sustainability of agricultural systems and changes can occur in both total and active, or labile, C pools. A procedure is presented to determine the degree of lability of soil C. By treating a ground sample of soil with 333 mM potassium permanganate (KMnO4) to oxidize a proportion of the carbon and by determining the total carbon by combustion, two fractions of C can be measured. These fractions represent carbon of different lability, with fraction I representing the Labile C (C-L), which is oxidized by 333 mM KMnO4, and fraction II representing the non-labile C (C-NL), which is not oxidized by 333 mM KMnO4. On the basis of changes in total carbon (C-T), a Carbon Pool Index (CPI) is calculated and, on the basis of changes in the proportion of labile C in the soil between a reference site and those subjected to agricultural practice or research treatments, a Lability Index (LI) is determined. These two indices are used to calculate a Carbon Management Index (CMI), with CMI = C Pool Index (CPI) xLability Index (LI)x 100. Analyses of paired samples (cropped and uncropped) from three sites in northern and central New South Wales, Australia, have shown a decline in CPI, a greater decline in LI and hence a decline in the CMI with cropping. Introduction of a legume into a wheat cropping system restored the Civil from 22 to 37 at the Warialda site. Analyses of paired samples from a sugarcane area in north Queensland have shown a decline in CMI in systems dominated by trash burning, but an increase in CMI in systems dominated by green cane trash management. Similar data from Brazil showed no increase in C-T with mulching but a 48\% increase in CMI due to an increase in the lability of C in the soil. The fractionation procedure and CMI outlined can be used to determine the state and rate of change in soil C of agricultural and natural systems.