Pupils will be given an "MOT" to ensure they can read properly at the age of six, the Education Secretary said today.
Michael Gove said the academy system would also be extended to allow successful headteachers to take over failing primary schools.
Figures provided by the Department for Education to BBC Radio 4's Today programme found 9% of boys - some 18,000 pupils - aged 11 had a reading age of seven or younger when leaving primary school.
While the proportion of youngsters achieving the necessary level 4 in English had risen from 49% to 81% in the last 15 years. But a persistent minority of children are failing to reach even level 2, the standard expected of seven-year-olds.
Today, Mr Gove said secondary education was pointless if children left primary school unable to read.
New teachers would be trained to use systematic synthetic phonics, regarded as the "single most effective method" to improve reading, Mr Gove said.
He added: "We also want to ensure that there is a basic check on children's ability to read at the age of six, an MOT to ensure children are reading properly, both that they are decoding the English language, in other words, they understand the individual letters, how they go together and how a word is made up.
"We also want, having identified those children who are not decoding fluently, we want to be able to ensure there is additional support for them."
Mr Gove said the last Labour government was "rhetorically committed" to dealing with the problem of reading standards in primary schools but it failed to learn lessons from the best schools about how to teach children to read.
He said the Government would be publishing more data about weaknesses in the education system, saying it would be used "shrewdly and wisely" to improve standards.
Headteachers whose schools persistently fail would be sacked, Mr Gove confirmed.
He said: "We have said that any school where you get fewer than 60% of children reading at the expected level and where they are not making appropriate progress will also be subject to specific intervention.
"We want to make sure that those schools where children are not being taught to read are tackled because, ultimately, if you do not get a child reading by the time they leave primary school, by the time they arrive at secondary school the curriculum is just a closed book to them, literally.
"I don't want to be in the business of sacking anyone but I do want to be in the business of saying to all schools and local authorities 'I'm sorry, it's unacceptable if children leave school (unable to read). You have seven years, you have ample resources, you have the full support of the department for education in tackling illiteracy'.
"If we can't, then we have got to do something better. There are great headteachers out there who have already done this... we can give headteachers the power to make a difference in other schools."
Mr Gove said there was an "unbudgable" group of children, mostly boys, who were not learning to read.
But, he said, some schools in deprived areas had managed to deal with the problem effectively while other headteachers still had persistently high rates of illiteracy in their classrooms.
He added: "All I would say is, what have we got to be afraid of if we ask all schools to get children by the time that they are six capable of having taken the first steps of reading properly?"
Ofsted will also be asked to ensure schools know the best reading schemes, while headteachers will have to publish which schemes they use.
These will then be compared to test results so Mr Gove and his officials can identify which schemes work best.
The MOT tests were first announced in 2007 by David Cameron when in Opposition and today's announcement is part of a wider Government drive to focus resources on early years and primary education, while cutting back on spending for older students, such as axing the Education Maintenance Allowance, which gives the poorest teenagers £30 a week to stay in education or training.
Mr Gove said the Government's Pupil Premium for schools in the most deprived areas would also help alleviate the problem.
Labour have challenged whether the premium is actually on top of what schools already receive from central Government.
As part of today's announcement, the Government released figures which showed 9% of pupils had the reading age of seven-year-old or younger when leaving primary school.
In Nottingham, 15% achieved below level 3 in literacy tests at 11, while in Derby, Telford, Manchester and Rotherham the figure was 14%.
Nottingham North MP Graham Allen, who is conducting a review of early intervention for the Government, said that children's chances of becoming literate are often determined before they even arrive at school.
Ofsted reports on primaries in Nottingham have found four and five-year-olds beginning school unable to speak a sentence or to recognise the difference between letters and numbers, he said.
For these children, the chances of achieving literacy by the age of 11 are hugely diminished, no matter what teaching techniques are used at school.
Nottingham has been pioneering early intervention programmes over the past few years involving intensive engagement with mothers from disadvantaged households in the first years of their babies' lives to encourage good parenting.
Mr Allen said he was hopeful that this would feed through to improvements in the literacy of the city's youngsters in future years.
Mr Allen said: "At 11, it is too late. What you need to do is get parents to read to babies and toddlers and encourage them to look at books, to get basic social and emotional capabilities in place.
"When my review reports in January, we will be proposing a strengthening of help in the very earliest years, which is cheap and effective, rather than throwing money at the problem after it has become rooted.
"Once a boy is 11 and can't read, it is very difficult and expensive to recover that ground, but unfortunately people look for a quick fix like changing the name of schools to academies or bringing in some remedial scheme. That is looking at the symptoms, not the cause."