About 11,000 year 6 and 10 students from around the country took part in the latest round of national computer literacy testing, carried out in late 2008.
The tests, conducted by the Australian Council for Educational Research, produced some alarming findings for a generation often associated with its tech savvy.
For instance, only 57 per cent of year 6 students reached or exceeded the proficient standard of Information and Communication Technology (ICT) literacy.
Year 10 students fared better when it came to computers, with 66 per cent reaching or doing better than the ICT literacy proficiency benchmark.
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Council deputy chief John Ainley said the most pleasing result of the study - detailed in a report released by Education Minister Julia Gillard on Thursday - was that children's scores had increased since testing was first done in 2005.
Just under half of surveyed year 6 students, and 61 per cent of their year 10 counterparts, were computer literate then.
"Students who do not develop proficiency in ICT are likely to be limited in their participation in later economic and social life," Dr Ainley, lead author of the report, said.
"In general, the results of this assessment indicate that Australian students are doing well in this vital area of their education."
However, the percentage of students achieving at the lowest proficiency levels remained the same during the last five years.
Dr Ainley said the report highlighted the difficulties indigenous, rural and poorer students faced when it came to computer literacy.
In year 6, just under a quarter of Aboriginal and Torres Strait Islander children were ICT proficient, compared to 59 per cent of their non-indigenous peers.
By year 10, the corresponding figures were 32 per cent and 68 per cent.
Forty-one per cent of year 6 students whose parents were in unskilled manual, office and sales jobs were computer literate, compared to 72 per cent of students with professional parents.
The corresponding figures were 52 per cent and 78 per cent for year 10 students.
Finally, year 6 students with a proficient level of ICT skill decreased from 61 to 38 per cent as they moved away from cities.
A similar, steady slump was shown among year 10s too.
Dr Ainley said there was a "small" group of students struggling to master ICT skills.
"This will require attention over time to ensure that (they) are not left behind," he said.
