Just 32 per cent of the Year 1 pupils in 300 schools who took a trial run of the test passed it.
In total 8,963 children took part in the pilot in June.
Ministers believe that systematic synthetic phonics is the method proven to improve reading standards for all children, including the weakest readers.
However, critics of the test, which involves children reading aloud a mixture of real and made-up words, say that it does not give a true picture of children’s reading ability or comprehension.
Around a quarter of the schools that took part in the test teach phonics systematically, in contrast to schools that use a variety of methods, such as using picture clues and memorising words. The proportion is thought to be similar for all primary schools in England.
Schools minister Nick Gibb said, ‘We need to face up to the uncomfortable truth that, despite the hard work of teachers, not enough of our children are able to read to a high enough standard.
‘We have to take account of our place internationally and listen to business leaders concerned about many school leavers’ literacy.
‘The Government can no longer simply congratulate itself on the proportion of pupils reaching the expected level.
‘The phonics check’s expected level, set by teachers, is appropriately challenging. We must adjust our sights if we are to tackle the country’s reading problem.
‘The levels we expect children to reach at Key Stage 1 and Key Stage 2 must not be the limits of our ambition – they should be considered the minimum we expect.
‘And we must get those below the level up to a standard that will help them progress further.
‘A solid grounding in phonics will help many children who are weak readers to improve.
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