Teenagers who fail to achieve good GCSE grades at English and maths will have to carry on studying the subjects beyond the age of 16.
This has been announced as the government accepts Alison Wolf's report on improving vocational education.
Professor Wolf was critical of the quality of skills being taught to many youngsters in the 16 to 19 age group.
"Good qualifications in English and maths are what employers demand," said Education Secretary Michael Gove.
There will also be changes to school league tables to show the spread of high and low achieving pupils.
Professor Wolf's report expressed her concern that too many teenagers are leaving school without adequate basic skills.
Education Secretary Michael Gove endorsed the report, which called for greater honesty in the information for students about the value of vocational courses.
"For too long the vocational education system has been devalued by attempts to pretend that all qualifications are intrinsically the same. Young people have taken courses that have led nowhere," said Mr Gove.
In response, Professor Wolf said: "For 20 years we have toyed around with vocational education but succeeded only in creating a bureaucratic and expensive system that limits the life chances of too many young people."
Professor Wolf had warned that hundreds of thousands of teenagers were being consigned to low-quality "dead end" vocational courses, when they really needed the type of basic skills in literacy and numeracy required by employers.
"The staple offer for between a quarter and a third of the post-16 cohort is a diet of low-level vocational qualifications, most of which have little to no labour market value," said the Wolf Report.
Last summer 45% of 16-year-olds failed to achieve a C grade at GCSE maths and English, and Professor Wolf wants such youngsters to continue studying these basic subjects.
The government has accepted the call for students to continue with English and maths, up until the age of 18.
This will aim to bring all pupils up to at least a C grade at GCSE, but for pupils who cannot achieve this the government is proposing "high-quality alternatives", which will be identified after a consultation.
While arguing that the system of vocational qualifications was "complex and opaque", Professor Wolf said that in practice "good levels of English and mathematics continue to be the most generally useful and valuable vocational skills on offer".
This emphasis on literacy and numeracy was welcomed by the Confederation of British Industry's director for education and skills, Susan Anderson.
"We welcome the announcement that young people who didn't get A*-C English and maths GCSEs will now be supported to achieve this benchmark by 19. These subjects are essential for work," she said.
The CBI recently warned that many employers were unhappy with the levels of literacy and numeracy among school leavers.
Professor Wolf's review also called for the end of "perverse incentives" in school league tables - with some pupils being steered towards vocational exams which would improve school rankings.
She warned against "incentives for schools to pile up large numbers of qualifications".
Exam league tables are to be expanded to show more information about the spread of a schools results, showing how the most and least able pupils are performing.
This addresses the concern that the current rankings - based on how many pupils achieve five GCSEs grade A* to C - encourage schools to focus too much attention on borderline pupils who could be pushed to achieve a C grade.
"If you have a single measure, which is the only thing that anybody cares about, it has absolutely appalling effects because people game it and they only care about the people around the margin," Professor Wolf told the education select committee last month.
Shadow Education Secretary Andy Burnham welcomed the proposals to improve English and maths skills.
But he warned that the government's introduction of a new league table measure - the English Baccalaureate - risked creating the kind of distortion that was being criticised in the current rankings.
Christine Blower, general secretary of the National Union of Teachers, said the English Baccalaureate "reinforces the idea that anything other than a traditional academic route is the poor relation".
"Yet again we hear the tired old assertion that vocational courses presently offered are the easy option for schools and students. This is simply not the case," she said.
Mary Bousted, general secretary of the Association of Teachers and Lecturers, warned that the government's promotion of university technical colleges could push young people into "irrevocable" choices at the age of 14.