Prime Minister Julia Gillard says it is a tragedy millions of Australian adults still cannot read and has called for greater action to boost literacy levels.
The National Year of Reading campaign was launched on Tuesday in a bid to encourage reading nationwide and tackle taboos surrounding illiteracy.
About 4.5 million working-age adults Australians do not have the necessary higher reading and numeracy skills to succeed in work or study, Ms Gillard said.
"Illiteracy is a tragedy," Ms Gillard said at the campaign launch at the National Library of Australia.
"A tragedy compounded by the fact that it's so unnecessary."
For a rich nation with universal education Australia could do better."
Like voting, reading was a form of enfranchisement and a pass to full participation in the community, Ms Gillard said.
Schools Minister Peter Garrett, Arts Minister Simon Crean and Labor MP Dick Adams were among those present at the launch.
Mr Adams, who only learned to read in adult life, truly represented the message behind the literacy campaign, the prime minister said.
"I think he is a terrific ambassador for our nation on what it means to become a reader when you are an adult," she said.
Mr Crean said literacy not only boosted self confidence and cultural expression but paid economic dividends as well.
"A creative nation is a more productive nation, a more competitive nation, and that's what we, as a country, need to go forward and embrace," he said.
The federal government contributed $1.3 million to the campaign, which is also supported by Australian libraries, state governments and the private sector.
It will involve children's competitions, peer-to-peer book reviews, adult book clubs and workplace literacy programs, as well as a challenge on August 25 for Australians to read for one hour.
Ms Gillard announced the winners of the "Our Story" competition before meeting with children to discuss their favourite books.
The prime minister said she had spent her summer holidays reading a wide range of books, including Grand Days by Australian author Frank Moorhouse.
Mr Crean meanwhile said he grew up on a diet of Greek and Roman mythology, French classics and Henry Lawson.
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