The three skills of communication, information technology and application of number were piloted in schools and colleges between 1997 and 1999.
The recommendation for the qualification arose from Sir Ron Dearing's review of the post-16 sector in 1996.
A joint team from the Office for Standards in Education, the Further Education Funding Council and the Training Standards Council visited pilot courses in 47 schools, 23 colleges and 13 training providers.
It found there were "substantial difficulties" in introducing the new qualification. Many of these difficulties stemmed "from the lack of a widely shared view across the 16-19 sector, in higher education and amongst employers about the need for the qualification, its purpose, and the benefits to be gained by the young people who undertake it".
Only a small proportion of A-level students completed the units in any of the key skills, and very few completed all three.
Students were initially positive - though unclear about the purpose of the qualification - but became demotivaed by the poor results they were given on external assessment.
Lack of knowledge about, or interest in, key skills by university admissions tutors and local employers had a negative effect on students' perceptions of the qualification.
The introduction of the key skill exam was more satisfactory in general national vocational qualification programmes, where teachers were more familiar with the concepts.
Many A-level teachers not directly involved in teaching key skills, had little awareness of them. And they had to be convinced of the qualification's value.
Inspectors found that external assessment was not considered approporiate for many work-based learners by trainers and employers. There was considerable resistance to externally-set tests.
"Many young people had specifically chosen work-based training because they wished to avoid the formal assessment of academic programmes."
Other than in IT, relatively little formal teaching of key skills took place in schools. There was more formal teaching in colleges, mostly on GNVQ courses.
Pilot of new key skills qualification 1997-99. Obtainable from OFSTED Publications Centre, PO Box 6927,
London E3 3NZ. 020 7510 0180. Ref HMI 218