A meeting of state, territory and federal education ministers last week agreed to the national testing programme aimed at assessing the reading, writing, spelling and arithmetical abilities of children. Roman Catholic and independent schools will also take part.
Pupils about to go up to secondary school will also be assessed by their teachers via classroom activities. Students identified as "at risk" will receive extra help through remedial reading.
Under the agreement, three of the states will scrap existing testing programmes where only a sample of pupils are subject to regular literacy and numeracy assessment.
Federal schools minister Dr David Kemp described the agreement as "an historic occasion for the children of Australia" because it stressed that every child starting school next year would, within four years, be able to read, write, spell and add up.
The Australian Education Union, however, described Dr Kemp as a "grandstanding hypocrite", saying that the federal government was preparing to slash its spending on the state school system where more than 70 per cent of Australian children were enrolled.
Dr Kemp added: "We cannot continue with the low levels of literacy that far too many children have when they leave primary school."