Not only is one fifth of the world's adult population illiterate, but 100 million children are not attending primary school, the Unesco report says.

The situation presents a "severe violation of rights and a brake on all aspects of development", says Unesco's fourth Education for All report.

And the typical 1% of education budgets set aside for literacy "must rise".

The report estimates an additional US$2.5bn (£1.4bn) needs to be spent each year if goals to achieve a 50% improvement in adult literacy are to be reached by 2015.

Unesco says governments and aid agencies must allocate more cash for youth and adult literacy programmes, as well as expanding quality primary and lower-secondary education.

While there is increasing backing for universal primary education, literacy is not high on the agenda of countries that give aid to other countries, the report says.

"Few bilateral donors and development banks make explicit reference to literacy in their aid policies."

The report says literacy is crucial if individuals are to participate in political, social and economic life.

And it points to links between better literacy and improved health, family planning and HIV/Aids prevention.

"The groundswell for halving the number of people living in extreme poverty in the next decade must translate into long-term commitments that recognise the indispensable role that education - with literacy at its core - plays in bettering the lives of individuals, their communities and nations," the report concludes.

Gender inequality

The regions found to have the lowest levels of literacy are sub-Saharan Africa, south and west Asia and the Arab states, where only 60% of the population are able to read and write.

Women remain more at risk of illiteracy, with only 88 women worldwide considered literate for every 100 men.

In Bangladesh and Pakistan, these figures are even less, at 62 and 57 respectively for every 100 men.

The Global Campaign for Education (GCE) welcomed the publication and its focus on adult literacy, saying illiteracy was a violation of the fundamental human right to education.

David Archer from the GCE said: "Literacy is the fertilizer needed for development and democracy to take root and grow.