Education Minister Jason Clare admits serious reform is needed in the country's schools as rural students continue falling drastically behind their city peers in literacy and numeracy.
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NAPLAN results released on Wednesday morning show fewer than 30 per cent of students in very remote schools rated as "strong" or "exceeding" in literacy and numeracy.
That is compared to at least 60 per cent of students at major city schools across years 3, 5, 7 and 9 hitting those high targets in almost all learning areas.
Nationally, one in 10 students across all grades were found to need extra support, while on average one-third of all Indigenous students were in that category.
The Australian Curriculum, Assessment and Reporting Authority, which oversees NAPLAN, said the strongest results tended towards non-Indigenous students in urban areas from the highest socio-economic backgrounds.
Mr Clare said the results made it "blisteringly clear" that more work was needed to improve education outcomes and bridge the gap.
"What we've done this year with NAPLAN is raise the bar," he told Nine's Today program.
"We've lifted the standards students are expected to meet, and we've done that deliberately so that we can better identify the students that need extra help.
Evidence shows only 20 per cent of students who fall behind in year 3 catch up by the time they reach year 9, the minister said.
"As a result, we're seeing some of those children drop out of high school and not finish year 12, and that's at a time where more and more jobs require you to finish high school."
This year's exams were the first under a new approach to test students against four levels of skill: exceeding, strong, developing and "needs additional support".
The Australian Education Union said the results reflect significantly under-resourced schools in remote areas, particularly in the Northern Territory where the number of students in need of support was as high as 85 per cent.
"The vast majority of private schools are at or above the schooling results standard and this is a clear demonstration of the inequality that exists for school funding in Australia," union president Correna Haythorpe said.
"There is no better time than right now to fully fund public schools.
"We have Labor governments almost all across Australia, who should understand the importance of the right of every child to have access to a high quality public education."
State and territory leaders echoed the calls for further funding, which Mr Clare acknowledged.
"We've got to fix that funding gap but we've got to fix this education gap that this report makes clear as well," he said.
"We've got to make sure that we tie this funding to the sort of things that are going to help children who fall behind to catch up, and then to keep up, ultimately finish high school."
NAPLAN reporting showed 65 per cent of students across Australia achieved the higher literacy and numeracy expectations of "strong" and "exceeding", while 23 per cent were at the "developing" level.
Girls performed better than boys in writing, with higher percentages of "strong" and "exceeding", while boys generally fared better than girls in numeracy.
The online tests, held in March, involved 1.3 million students including 1050 enrolled in distance education or homeschooling, across 9414 schools.
Australian Associated Press
