The number of people deemed illiterate in China grew by 30 million to 116 million in the five years to 2005, an education official has said.
China measures literacy according to character recognition
Gao Xuegui said the main reason was that farmers' children were leaving school early in order to find work.
China's economic growth has seen millions of poorer people leave their rural homes to work in cities.
People unable to read and write 1,500 Chinese characters are officially deemed illiterate.
"The situation is worrying," Mr Gao was quoted as saying in the official People's Daily.
"Illiteracy is not only a matter of education, but also has a great social impact," he said.
Mr Gao, from the Ministry of Education, said another factor that contributed to the increase in illiteracy was the success of previous campaigns.
China's Communist Party made tackling illiteracy a key goal after it came to power in 1949, through education and simplifying some Chinese characters.
But Mr Gao said that the success led many local governments to shut down departments tasked with confronting the issue.