The study from the Basic Skills Agency reveals the crucial role played by early years in creating a spiral of poverty and unemployment caused by poor basic skills.
A study of 1,700 people born in the same week in 1958 shows the social gulf between those with good and poor skills widens with age. But 40 years after birth, the biggest influence on an adult's basic skills remains parenting and education up to age seven - greater than the affluence or social status of the child's parents.
A spokesman for Education Secretary David Blunkett said the findings reinforced the importance the Government has placed on early years' education and learning in the home. They come as the first report from the Social Exclusion Unit this week also made the link between failure at school and adult unemployment.
The study, Influences on Adult Basic Skills, by the Social Statistics Research Unit at City University, shows people with very low basic skills as adults were:
* seven times more likely to be eligible for free school meals; * less likely to be read to by their parents; * five times more likely to have parents rated by teachers as uninterested in their education.
Damningly, they were five times more likely to be identified by teachers as needing extra help - yet fewer than half received it. Alan Wells, director of the Basic Skills Agency, said: "Although this group of people left school some time ago, their experience reinforces the need for intervention early to help children who are struggling with the basic skills most are mastering."
Children were already struggling in tests at seven but at 11 scored only half as well as those with good literacy as adults. Their chances to get out of the trap declined as they got older.
They were more likely to attend schools with low aspirations, more likely to be placed in non-exam streams, and more likely to truant - something this week's social exclusion report addresses. What basic skills they had atrophied as they got older.
They were more likely to have been unemployed for long stretches and less likely to receive even basic training. At age 37, two-thirds of men and 78 per cent of women had never received training from an employer.
Mr Wells said it painted a depressing picture of a spiral of unemployment with little chance to gain the qualifications that increasingly vital to progress today. "Winning the lottery is perhaps the only way to escape," he said. "For our society, it's a tremendous waste of potential."
Labour has pledged a pre-school place for every four-year-old from September, and for every three-year-old in future. It has also endorsed projects to involve parents more closely in children's development - for example the BSA's Babies Need Books project.
The agency also urges more support at secondary school, training at work and for the unemployed as a way of improving and using skills.
Influences on Adult Basic Skills by Samantha Parsons and John Bynner, pound;5 plus pamp;p from the Basic Skills Agency, Commonwealth House, 1-19 Oxford Street, London WC1A 1NU.