But the ACT has topped the nation in every test field and if its results are separated from the rest of Australia’s, it has placed in the top 10 in the world across all year levels of reading, maths and science - exceeding every international benchmark for minimum required standards.

The Australian Council for Education Research, which coordinates Australia’s test participation, tied the drop in performance to teachers lacking qualifications and expertise in maths and science, schools lacking resources and students being disengaged from maths and science learning, or being subject to bullying.

For the first time last year, 300,000 Year 4 students concurrently took part in the International Reading Literacy Study and 600,000 Years 4 and 8 students took part in the Trends in International Mathematics and Science Study across nearly 50 countries.

Australia was significantly outperformed by 21 countries in Year 4 reading and maths and science performance has largely stagnated over the past 16 years. The United States and England performed in the top quartile across all measures.

Chief executive of the Australian Council for Educational Research, Geoff Masters, said “To say the results are disappointing is an understatement”.

Australia performed worst in reading, with about one quarter of students not meeting the intermediate benchmark – the standard generally considered in international achievement studies to be the minimally acceptable level.

Australia was outperformed in reading by countries such as Slovenia, Lithuania, Bulgaria, New Zealand, Portugal, and the Czech Republic.

The report found almost one third of Australian students reported not being engaged in their mathematics and science lessons.

In Year 4, Australia came 25th in science and 18th in maths but by Year 8 it had improved to come 12th in science and 11th in maths out of 50 countries.

The results, issued on Tuesday night, revealed the Asian nations of Korea, Singapore and Japan were in the top five across reading, maths and science.

But the picture is far less bleak in the ACT, where local students significantly outperformed the rest of the country and, significantly, achieved above the international benchmark on every measure.

In Year 4 reading, 87 per cent of Canberra students met or exceeded the international intermediate benchmark compared with 66 per cent in the Northern Territory (the lowest Australian result), a national average of 76 per cent and an international average of 80 per cent.

In Year 4 maths, 81 per cent of Canberra students met or exceeded the benchmark compared with 59 per cent in the Northern Territory, a national average of 70 per cent and an international average of 69 per cent.

In year 8 maths, 74 per cent of Canberra students met or exceeded the benchmark compared with 44 per cent in the Northern Territory, a national average of 63 per cent and an international average of 46 per cent.

In Year 4 science, 84 per cent of Canberra students met or exceeded the benchmark compared with 60 per cent in the Northern Territory, a national average of 71 per cent and an international average of 72 per cent.

In Year 8 science, 82 per cent of Canberra students met or exceeded the benchmark compared with 57 per cent in the Northern Territory, a national average of 71 and an international average of 52 per cent.

In September, Prime Minister Julia Gillard said Australia must move up the ranks to reach the top five countries for reading, maths and science by 2025.

But Professor Masters said, “It is difficult to see how Australia will be in the top five countries by 2025 if we continue on our current path.”

“We need to look carefully at what improving countries are doing to see what lessons there are for Australia … For a developed country like Australia, these results are concerning.”

Professor Masters said the challenge of improving standards “will not be met by any single strategy, but will require a well-planned and coordinated effort on the part of governments, education systems, schools, parents and the broader community”.

In separate questionnaires, cultural factors in schooling were also examined, including teacher experience and expertise.

At Year 4 level only three-quarters of Australian Year 4 students were being taught math by teachers who were “very confident” of teaching mathematics and by Year 8, around one-third of students were being taught by teachers with no content or training in maths.

In comparison to the international average, few Australian primary teachers had a science background, and compared to mathematics and reading, these was substantially less professional development undertaken in science.

At Year 4 level, about half of the students were being taught science by teachers who felt “well-prepared” to teach all science topics, dipping to less than half for the areas of physical and Earth science. By Year 8, one-quarter of students were taught by science teachers who didn’t feel well prepared to teach all topics in science, particularly Earth science and physics.

Students attending schools in which principals reported no resource shortages scored significantly higher in reading and mathematics, although not in science, than students attending schools in which principals reported being affected by resource shortages.

At least half of Year 4 and Year 8 students reported being "somewhat" affected by resource shortages.