The latest census of early childhood skills shows one in five Australian children still has some kind of developmental problem when they start formal schooling, despite small gains in language and other areas.
The Australia Early Development Index (AEDI) says 22 per cent of the 290,000 five-year-olds assessed were classified as "developmentally vulnerable", a decline of 1.6 percentage points since the last AEDI in 2009.
Federal Minister for Early Childhood Peter Garrett said the improvement was "statistically significant" but acknowledged the government would have to work on lowering the figure.
"One in five entering school still with some developmental impediment is something which really needs urgent attention," Mr Garrett said, releasing the second round of the triennial AEDI on Thursday.
"We are basically improving the opportunities for young children in Australia before they get into school and in doing that we're setting them up for successful school learning," Mr Garrett told reporters at Blacktown, in Sydney's west.
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He said there was no single way to solve the problem, but it would take a combination of affordable and accessible early education among other things.
But Benevolent Society chief Anne Hollonds said the outcome was "unacceptable in a country like Australia".
"This data is ... about our children developing fundamental skills that will stick with them through adult life," Ms Hollonds said in a statement.
"Frankly, as a community, we can do better than this.
"The government must set firm targets to dramatically improve these scores."
The AEDI assessed the social competence, health and wellbeing, emotional maturity and language, general knowledge, cognitive and communication skills of children preparing for their first year of formal schooling.
The new figures showed the percentage of children with problems in development of social competence edged down 0.2 points to 9.3 per cent.
Those seen as vulnerable in their emotional maturity showed a 0.7 point drop to 7.6 per cent.
Tye number of children likely to have vulnerabilities in language and cognitive skills fell almost two percentage points to 6.8 per cent.
The proportion with general knowledge and communication skill vulnerabilities dipped 0.2 points to 9 per cent.
The AEDI observed "significant signs of progress" in the early development of indigenous children.
Indigenous kids with developmental vulnerabilities dropped to 43.2 per cent in 2012 from 47.4 per cent in 2009.
The largest improvement was in the language and cognitive development, with the 2012 figure of 6.8 per cent down from 8.9 per cent in 2009.
