Business leaders say they are still to be convinced that reforming the exam system would raise standards of literacy and numeracy

The comments come as the report on the education of 14 to 19-year-olds by former schools inspector Mike Tomlinson is published. The report suggests replacing GCSEs and A-levels with a diploma.

Under the plans, there would be less coursework and fewer exams but, at advanced level, tougher questions would stretch the brightest.

There would be clearer routes for those wanting work-related learning within the diploma and everyone would have to have the "core" English and maths skills businesses say children often lack.

But business leaders say there is widespread company concern about the number of young people who leave school unable to read or write properly.

In a recent CBI-Pertemps survey, 47 per cent of firms expressed dissatisfaction with the basic skills of school leavers. A third of companies said they provide remedial literacy and numeracy training.

John Cridland, CBI Deputy Director-General, said: "Business is absolutely behind the government in its drive to improve the education system… But while firms want radical action, they will take some convincing that a major shake up of exams will resolve the issue."

Mr Cridland added that businesses wanted to know exactly how changing qualifications would raise standards in maths and English.

The University Vocational Awards Council (UVAC), by contrast, hailed the Tomlinson report as a major step towards the acknowledgement of work-based routes and apprenticeships as valid paths for progression into higher education.

Prof Simon Roodhouse, chief executive of UVAC said: "Tomlinson's recommendations open up the chance for thousands of young people to progress smoothly into higher education via a vocational route... This can only be good news for individuals, society and employers."