Many students fear tests which can slow progress and drive them to drop out, says a report by the Learning and Skills Development Agency.
Researchers studied the effects of summative assessment, tests and portfolios of work on students' motivation.
They found that adult learners could suffer "fear and panic" at the thought of testing. Some adults saw testing as a form of competition which undermined trust in the classroom.
"There is evidence that summative assessment and testing do more harm than good," said Maggie Greenwood, research manager at the LSDA.
"We need to find ways to measure achievement that motivate people rather than undermining their confidence."
She said assessment methods which encouraged feedback from tutors and students were more effective in raising achievement.