The government is doing well, but will need to do even better if it is to meet its target of 2.25m people qualifying in basic skills by 2010.

The half-term report from the National Audit Office praises the government for meeting its benchmark of 750,00 English adults qualified in literacy and numeracy by the end of 2004.

However the report says that the task ahead will need greater levels of creativity if the 2010 target is to be met.

Currently 26m people of working age have levels of literacy and numeracy below those expected of school leavers.

The report warns that achievement of the 2010 target will require a further 1.5 million learners to achieve a first qualification, from a wide range of groups, some of whom will be harder to engage than others.

It calls for the quality of learning to be raised and for more teachers to have up to date training in teaching literacy, language and numeracy. But adds that initiatives to train teachers will take time to make an impact.

The NAO also stated that progress had been slow in engaging employers and more SMEs needed to be persuaded of the benefits of raising the skills of their employees.

Auditor General Sir John Bourn said that higher levels of literacy and numeracy would benefit England socially and economically.

"The Department has made substantial progress since 2001 in improving the teaching of literacy and numeracy and making more people aware of the options and wanting to learn. But this is only the beginning," he said.

"The Department and its partners will need to be creative and responsive if they are to reach another 1.5 million people by 2010. My report sets out some of the steps they need to take if they are to succeed."