Basic teading skills of 17-year-old students - especially blacks, ghetto dwellers, offspring of poorly educated parents and others who normally score lowest on reading tests - improved during the early 1970s.

But disparities in reading profilciency are still wide, and one of every eight 17-year-olds attending school is unable to read well enough to "perform tasks necessary to function in American society."

This mixture of good news and bad news - an encouraging but not definitive sign that American education may have turned the corner in its difficult battle with functional illiteracy - emerges from nationwide testing by the Denver-based National Assessment of Educational Progress for the U.S. Office of Education. The test results were released recently.

Using a nationally representative sample of 4,200 17-year-olds who were still in school, the study compared reading performance levels in 1971, 1974 and 1975, employing only such basic materials as traffic signs, telephone directories, help-wanted ads and insurance policies.

The major gains - showing, for instance, that blacks gained at more than twice the rate of white in reading performance - were made from 1971 to 1974.There was no significant overall change from 1974 to 1975, although blacks and ghetto dwellers continued to make improvements.

"The gap in functional reading performance is definitely closing>" said Gilbert B. Schiffman, directo rof the Office of Education's right to read program, which commissioned and financed the study. "particularly encouraging is the rapid improvement among those groups of students who traditionally have had reading problems, but, nevertheless, a great deal remains to be done before we can claim to have eradicated illiteracy."

The study showed that between 1971 was 2.2 per cent.

Black students improved by 4.8 per cent while whites improved by 2.1 per cent, although the gap between black and white achievement is still wide - 13.7 per cent.

Students whose parents had no high school education gained by 4 per cent while those with parents who had post-high school education gained by 1 per cent, with a gap between them of 11.4 per cent.

The gap between students from low-income urban areas and affluent urban areas narrowed to 8.2 per cent with poorer students registering a 4.9 per cent gain while weahterlet students made no appreciable progress.

Males gained by 3 per cent while females gained by 1.4 per cent, narrowing the female reading edge to little more than 1 per cent.

The Southeast continued behind the rest of the country in reading but improved by 3.3 per cent, the highest of any region, and now lags just 3 per cent behind the national average.

Despite the gains, the study found that 13 per cent of all 17-year-olds surveyed could not answer at least three-fourths of the questions correctly and thus were "functionally illiterate," meaning they could not read well enoght to cope in today' world. Because some quesions were added between 1971 and 1974, there was no comparable figure given for 1971 and hence no standard of comparison.

The study showed the highest level of illiteracy among blacks (42 per cent) as opposed to whites (8 per cent), among ghetto residents (22 per cent) as opposed to suburbanities (5 per cent) and in the Southeast (20 per cent) as opposed to the Midwest (9 per cent).

A U.S. Office of Education study concluded in 1975 that 23 million adult Americans - one of five - were functionally illiterate.

The National Assessment study made no attempt to isolate reasons for the dispurities or improvements in reading levels that it found. Nor did it attempts to portray the findings as signifying a major reversal in the downward trend of students achievement over the past decade.

"But obviously, somewhere along the line, something, somewhere, is being done well," said Helen Masterson, spokeswoman for the National Assessment. Reading deficiencies "have gotten a lot of attention in recent years" and the improvements may reflect accelebrated efforts to improve basic reading skills, she said.

While it can be argued that disadvantage groups make the largest gains because they have the most Iceway for improvement, the gains registered by blacks and others in the study "has got to be considered a leap forward," she said.

Masterson pointed out, however, that the National Assessment survey reflected only proficiency in handling simple reading tasks, and noted that other tests involving more advanced reading skills do not show comparable improvement.

The National Assessment is a testing program run by the Education Commission of the States, a nonprofit coalition of public officials and private citizens that promotes educational improvement projects.