Children starting primary and secondary schools in England are to receive free books to help raise reading levels.
Three million free books will go to youngsters
Detailing his 10th pre-Budget report, Chancellor Gordon Brown said this would amount to three million books being given to five and 11-year-olds.
Mr Brown said six-year-olds struggling with reading would be given extra help.
And he also pledged to raise adult skills levels in the UK, saying 90% of adults should have qualifications equivalent of five good GCSEs by 2020.
The chancellor promised to raise capital investment in schools but the Conservatives accused him of "reheated spin".
Mr Brown's promise of three million free books for school children builds on the Bookstart scheme launched in July last year.
The project saw £27m invested into nine million free books for children under the age of four in an attempt to give them a good start in literacy.
He outlined how the Every Child a Reader programme would be gradually extended across the country.
All children who, at the age of six, were falling behind in reading will be offered special catch up tuition, he said.
And in secondary schools where the learning gap between boys and girls is greatest, funds for extra support for mentoring, small group tutoring and personalised learning will be set aside, he added.
The chancellor also said adult workers needed the necessary skills for the workplace.
He said former CBI director general Sir Digby Jones would be asked to "advance an agenda" on improving workplace training.
Mr Brown told the Commons that underperforming colleges must be reformed.
And he said the government would consult on bursaries worth £2,000 for looked-after children to go to university.
A scheme of volunteering would allow students to get a reduction in their tuition fees.
Mr Brown told the House that universities would receive £60m a year for applied research with commercial potential to help British science to transform knowledge into new jobs.
'World's most educated'
The chancellor also announced a four-year £36bn programme of refurbishment and rebuilding to make England's schools and colleges "fit for the 21st Century".
He said the massive programme of renovation was part of a government drive to make the UK "the most educated nation in the world".
Total capital investment in education would increase to £8.6bn in 2008-09, £9.1bn in 2009-10 and £10.2bn in 2010-11 - the equivalent of an average 4.1% real-terms growth above the rate of inflation each year, he said.
The chancellor also set out his goal for 12,000 new or completely refurbished schools - half of all primaries and 90% of secondaries - and 100 rebuilt colleges and 3,500 new children's centres.
Mr Brown said more cash would go directly to schools and head teachers.
Primaries currently received £39,000 directly and this would go up to £50,000 by April next year, he said, and direct funding for secondaries would rise from £150,000 to £200,000 by the same date.
The chancellor also set aside £130m extra for personalised learning programmes.
But his announcements were dismissed by the Conservatives as repeats.
They said he repeated his "highly misleading" announcement on capital investment, by overstating the real amount he would spend.
The growth, they said, was in fact expected to fall and his pledge of more cash going directly to head teachers would be for one year only.
Shadow Chancellor George Osborne told the Commons that despite investment in education, "one in six 16-year-olds cannot read, write or add up properly".
"And yet these are the very children who have been educated almost entirely under a Labour government," he said.