England's workers need better skills so firms can compete with those in India, China and other emerging economies, the Education Secretary said.
Businesses have complained about a skills shortage
Ruth Kelly told MPs the government planned to build on attempts to improve adult skills in England.
All adults would be entitled to free lessons to reach GCSE standard, after a successful pilot scheme.
And there would be a network of specialised skills academies for industry, she confirmed.
But colleges say the real issue is a lack of funding, making education for many adults and employers "a disaster waiting to happen".
Lack of basic skills
A government white paper on skills also confirmed plans for a network of 12 "skills academies" in different sectors, in partnership with employers.
"The only viable course for the UK is to move to a high-skills, high value-added economy," she said.
"We cannot afford to stand still on skills."
Government figures suggest 15 million adults lack basic skills in numeracy and five million in literacy.
There have been improvements since 1997 and the percentage of the workforce educated to the equivalent of two A-levels is said to have risen from just over 43% of the workforce to just over half.
But businesses still complain of a skills shortage.
Ms Kelly said: "We need to tackle this and go even further to support more adults in achieving the higher end technician, craft and professional qualifications our economy needs to compete with the best."
Improving the national skills base would involve a joint approach from the government, employers, trade unions, universities, colleges and other training, she said.
SKILLS WHITE PAPER
Free vocational learning to GCSE level for all adults
Pilot schemes for free higher-level vocational training
Network of skills academies
In a survey of 6,000 businesses, published last month, the British Chambers of Commerce said the number of firms finding it hard to recruit skilled workers had risen by 50% in a decade.
In 2003, the government introduced pilot schemes giving people free access to Level 2 courses - equivalent to GCSEs.
It says these have helped some 130,000 low-skilled adults to get training either at work or at their local college or training provider.
It is going to roll these out across England.
A weekly adult learning grant has been provided for those aged 19 to 30 studying for their first A-level or equivalent qualification.
Association of Colleges chief executive, John Brennan, said: "Without proper funding the strategy will fail.
"The white paper fails to address the real story about adult skills - the failure to persuade employers to invest more in learning."
This raised the prospect of funds being diverted from other learners, course fees rising at 10 -15% a year "regardless of ability to pay", fewer concessions for pensioners and working adults, and some courses being withdrawn.
A spokeswomon for the education department said there was no "lack of funding".
Total funding for 16 to 18-year-olds and adults in further education will have risen by over £1bn between 2002-03 and 2005-06, she added.