Figures released by the Department for Education and Employment show that 72 per cent of last summer's primary school-leavers were reading at the expected standard of level 4.
Nine out of ten of them could also spell accurately and produce clear, organised writing in joined-up
This leaves schools just eight points short of the target laid down by the Government and calls into question the need for last month's dramatic move to cut back the primary curriculum to the basics.
With English scores leaping up five points last year, ministers seem to be on course to meet their promises, at least as far as reading is concerned.
The main worry is children's writing where only 58 per cent are at level 4.
But even here there is surprising news as last summer's tests showed that 95 per cent of pupils had reached at least level 3 in writing and reading. In theory this means they can write clearly and read fluently across a wide range of texts.
According to Don Foster, Liberal Democrat spokesman, either the key stage 2 tests are inaccurate, or the Government is exaggerating the scale of the problem.
"If we have got 95 per cent of 11-year-olds at at level 3, it's very hard for the Government to justify the statement that there is 'chronic underachievement'," he said.
"The question then arises whether there's sufficient justification for the relaxation of the national curriculum in the rushed way the Government's done it. One almost worries that it's trying to create the impression of things being extremely bad so they can demonstrate how well their policies have worked."
But he also called for a re-examination of the national testing structure which he believes is failing to produce clear information about which pupils are struggling.
"We know there are genuine problems in literacy and numeracy and they need to be addressed," he said. "We need it clear in our mind what the nature of these problems is and where they are located.
"The chances of David Blunkett failing to meet his targets and having to resign are looking remarkably slim. But maybe he's got the reading targets wrong. Maybe he ought to be setting himself more challenging targets."
The new figures were released in answer to questions from education campaigner Charles Bell.
The 72 per cent reaching level 4 in reading is substantially better than the overall figure for English which includes marks for writing. Sixty-three per cent of last summer's 11-year-olds reached this standard for English overall, a figure ministers have promised to raise to 80 per cent.
Ministers are urging all primary schools to adopt the "literacy hour" along with other proposals in the national numeracy strategy. They have also told headteachers they can concentrate on the basics at the expense of the arts and humanities.
Mr Bell said that the Government and the Office for Standards in Education have created a false impression of "Dickensian illiteracy". The back-to-basics agenda, he said, amounts to a dumbing down of the curriculum in order to solve "a virtual non-problem".
The Qualifications and Curriculum Authority insisted that its tests were wholly accurate. A spokesman described level 3 as "the beginnings of functional literacy" encapsulating a solid, nuts-and-bolts approach to reading. Level 4 involves more sophisticated understanding.
A senior government source described the results as very